GLOBALIZING INDUSTRIAL RESEARCH

AND DEVELOPMENT

Donald H. Dalton

Office of Business and Industrial Analysis

Economics and Statistics Administration

U.S. Department of Commerce

and

Manuel G. Serapio, Jr.

Assistant Professor of Management

and International Business

Graduate School of Business and Administration

University of Colorado at Denver

U.S. Department of Commerce

Office of Technology Policy

Asia-Pacific Technology Program

October 1995
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TABLE OF CONTENTS

PAGE

FOREWORD ............................................................................................ 5

EXECUTIVE SUMMARY ............................................................................ 7

1. TRENDS IN U.S. R&D EXPENDITURES BY FOREIGNOWNED COMPANIES .............................................................................. 9

Company-Funded R&D Expenditures ................................................... 10

Rising Share of Foreign Funding of U.S. R&D ...................................... 10

Country Shares ........................................................................................... 11

Industry Distribution ................................................................................ 12

2. FOREIGN R&D FACILITIES IN THE UNITED STATES ............................. 15

Definition of a Foreign R&D Facility in the United States .................. 16

R&D Facilities, by Country and by Industry ......................................... 17

Size: Largest R&D Facilities...................................................................... 18

Location ....................................................................................................... 20

Nature and Scope of Operations ............................................................. 21

3. U.S. R&D FACILITIES ABROAD: A COMPARISON .............................. 26

R&D Facilities ............................................................................................. 27

Comparison of Investment Motivations ................................................ 28

4. R&D GLOBALIZATION ISSUES ............................................................ 29

Direct Benefits ............................................................................................. 29

R&D Intensity ............................................................................................. 30

Extent of Globalization.............................................................................. 30

Technology Transfer ................................................................................... 31

BIBLIOGRAPHY ..................................................................................... 32

APPENDIX A. FOREIGN R&D FACILITIES IN THE UNITED STATES,

BY INDUSTRY ........................................................................................ 37

APPENDIX B. FOREIGN R&D FACILITIES IN THE UNITED STATES,

BY COUNTRY ......................................................................................... 61

APPENDIX C. U.S. R&D FACILITIES ABROAD .................................... 83

GLOBALIZING INDUSTRIAL RESEARCH AND DEVELOPMENT
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FOREWORD

The research and development (R&D) enterprise is truly becoming a

global entity. Foreign and U.S. companies are investing in R&D

facilities around the world at a record pace. They are seeking to reap the

rewards of foreign scientific and technical discoveries, take advantage of

human resources, and tailor their R&D to host country customer needs.

Since 1987, the Office of Technology Policy’s Asia-Pacific Technology

Program has helped U.S. companies and researchers leverage foreign

science and technology through the publication of high-quality technical

assessments and studies, and its many other activities. This study,

Globalizing Industrial Research and Development, continues our tradition of

providing U.S. organizations with the specialized information they need

to make educated business decisions on technology-related questions.

A wide range of practical questions and policy concerns arise from the

rapid growth of the global R&D enterprise. How many foreign R&D

facilities are there in the United States? In what industries and regions is

this investment most concentrated? Are we seeing an erosion of U.S.

science and technology leadership? What is the real importance of the

globalization of R&D? What motivates firms to invest in R&D facilities

overseas? Are there short-term or long-term benefits for the U.S.

economy?

Globalizing Industrial Research and Development makes a significant contribution to the process of answering these questions by shedding new light

on the magnitude, scope, and nature of foreign R&D investment in the

United States. It expands and updates Office of Technology Policy’s

earlier seminal study published in 1992. Much has changed since we

completed that study. Our 1992 study listed just 250 U.S. research facilities

of foreign companies. That number has grown to 645 facilities owned by

more than 300 parent companies. We also include for the first time a

comparative section on U.S. R&D investment abroad and provide a

partial listing of U.S. overseas R&D facilities. Finally, our discussion

highlights the most current data from the National Science Foundation

(NSF) and the Commerce Department’s Bureau of Economic Analysis

(BEA) on these important matters.

The views expressed are those of the authors and editors and not

necessarily those of the Department of Commerce.

Graham R. Mitchell

Assistant Secretary of Commerce for Technology Policy
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EXECUTIVE SUMMARY

R&D spending in the United States by foreign-owned companies is now

more than $14.6 billion, making it large enough to have an influence on

the overall growth rate of total private R&D in the United States. This

report sheds important light on the magnitude, the nature, and the scope

of this investment. It also explores the major factors influencing the

location decisions of foreign R&D facilities in the United States. This

information is important in increasing our understanding of the dynamics

of R&D as well as the flow of high-value-added jobs.

In a complementary trend to increased foreign R&D investment in the

United States, U.S. companies have substantially increased their R&D

spending abroad, nearly doubling it between 1987 and 1993. This report

details this trend and the rationale for U.S. research activities abroad. The

overall globalization of the R&D enterprise is clearly illustrated by the

actions of both U.S. and foreign firms.

This report also finds that the investment motivations for U.S. R&D

abroad and for foreign R&D in the United States are strikingly similar.

These motivations range from assisting the parent company to meet host

country customer needs and monitor technological developments, to

allowing the firms to take advantage of specialized skills in the host

country. U.S. and foreign companies primarily conduct applied research

abroad. The pharmaceutical and biotechnology industries also carry out

large-scale basic research in offshore locations.

Foreign R&D Investments in the United States: Key Findings

■ R&D expenditures by foreign-owned companies in the United

States more than doubled, from $6.5 billion in 1987 to $14.6 billion

in 1993, and accounted for more than 15 percent of total U.S.-

company funded R&D. R&D spending by foreign-owned

companies in the United States increased at a much faster pace

than R&D spending by U.S. firms within the United States.

■ Foreign companies accelerated the establishment or acquisition of

R&D facilities in the United States. At the end of 1994, foreign

companies owned more than 645 facilities designated as R&D

centers in the United States. These facilities are owned by more

than 300 foreign parent companies.

R&D expenditures by

foreign-owned companies

in the United States

more than doubled, from

$6.5 billion in 1987 to

$14.6 billion in 1993.
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■ The 224 Japanese R&D facilities in the United States outnumber

the U.S. R&D facilities of other countries. The United Kingdom

has the second-largest number of facilities (109), followed by

Germany (95) and France (52). The number of U.S. R&D facilities

owned by Korean parent companies has more than doubled, from

about a dozen in 1992 to 27 in 1995.

■ At the end of 1993, foreign-owned companies conducting R&D in

the United States employed more than 105,000 R&D workers.

■ Switzerland ranks first in R&D expenditures by foreign

companies in the United States, spending $2.5 billion in 1993. It is

followed by Germany ($2.3 billion), the United Kingdom ($2.2

billion), Canada ($2.2 billion), and Japan ($1.7 billion).

■ The largest impact on R&D spending by foreign companies in the

United States resulted from several major acquisitions by foreign

firms of U.S. pharmaceutical and biotechnology companies with

large R&D budgets.

■ Industries with the largest number of foreign facilities are drugs

and biotechnology (113), chemicals and rubber (109), automotive

(53), computer software (44), computers (39), and semiconductors

(35). Japanese firms have the largest number of R&D facilities in

the automotive and electronics industries.

■ Foreign R&D facilities in the United States are heavily

concentrated in some areas of the country, such as Silicon Valley

and greater Los Angeles (CA), Detroit (MI), Princeton (NJ),

Research Triangle Park (NC), and Boston (MA).

■ The most frequently cited reasons for investing include (1) to

assist parent companies in meeting U.S. customer needs; (2) to

keep abreast of technological developments in the United States;

(3) to employ U.S. scientists and engineers; and (4) to cooperate

with other U.S. R&D laboratories.

U.S. R&D Investments Abroad: Key Findings

■ U.S. companies have increased their R&D spending abroad from

$5.2 billion in 1987 to $9.8 billion in 1993. More than half of U.S.

R&D expenditures abroad are accounted for by U.S. affiliates in

More than half of U.S.

R&D expenditures

abroad are accounted for

by U.S. affiliates in five

countries: Germany,

United Kingdom,

Canada, France, and

Japan.
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five countries: Germany, United Kingdom, Canada, France, and

Japan.

■ In recent years, R&D spending by U.S. affiliates in newly

industrializing or developing countries has increased. These

countries include Singapore, Brazil, Mexico, and Hong Kong.

■ Several major studies show that, while the amount of U.S. R&D

abroad has increased, leading-edge R&D on a company’s core

technology is still performed at home. About 90 percent of R&D

expenditures by U.S. companies still is spent at their facilities in

the United States.

■ In 1993, most of the expenditures on U.S. R&D abroad were

concentrated in the following sectors: drugs, chemicals,

automotive, computers, and services.

■ Of the 108 U.S. facilities listed, Europe contains 62 facilities,

followed by Japan with 29 and Canada with 14.

1. TRENDS IN U.S. R&D EXPENDITURES BY FOREIGNOWNED COMPANIES

During the past six years, research and development (R&D) expenditures

by foreign-owned businesses in the United States (U.S. affiliates of foreign

firms in which a foreign parent company owns at least 10 percent of the

affiliate’s equity) have increased at a much faster pace than total R&D

expenditures within the United States by U.S. firms. R&D spending in the

United States by foreign-owned companies is now large enough to have

an influence on the overall growth rate of total private R&D in the United

States. In the high-technology sector, R&D expenditures by foreign companies account for one out of every five dollars spent on corporate R&D

in the United States. The growth in R&D spending by foreign companies

in the United States can largely be attributed to the expansion of R&D

expenditures by the U.S. affiliates of multinational companies from six

countries: Switzerland, Japan, United Kingdom, Germany, France, and

Canada.

In the high-technology

sector, R&D

expenditures by foreign

companies account for

one out of every five

dollars spent on

corporate R&D in the

United States.
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Company-Funded R&D Expenditures

Data on R&D spending by U.S. and foreign-owned companies are collected through surveys of companies by the U.S. Commerce Department’s

Bureau of Economic Analysis (BEA)1

 and the National Science Foundation

(NSF)2

. BEA data are based on annual surveys of the R&D expenditures of

U.S. affiliates of foreign companies in the United States. The NSF publishes two series of industry R&D statistics: (1) Total funds (company,

federal, and other) and (2) company and other (except federal) funds. The

term “company-funded” R&D refers to the NSF industry R&D series

excluding federal funds and covers R&D performed within the United

States by both U.S.-owned and foreign companies.

Both the BEA and NSF surveys use similar Standard Industrial Classification (three-digit) industry classifications for their company or enterprisebased surveys, although some companies perform R&D in various industries. Because the BEA and NSF surveys limit their definition of R&D

expenditures by foreign-owned companies to funds spent at companyoperated R&D facilities, the data from both surveys are conservative

estimates of R&D expenditures. Both surveys exclude other types of

foreign-sponsored R&D, such as foreign company-sponsored research at

U.S. universities. However, the NSF conducts (at two-year intervals) a

separate survey of contract research in the United States.

Rising Share of Foreign Funding of U.S. R&D

According to BEA survey data, R&D spending by U.S. affiliates of foreign

companies more than doubled from $6.5 billion in 1987 to $14.6 billion in

1993. With the exception of the years 1991 and 1993, R&D expenditures by

U.S. affiliates of foreign companies have increased at a rate of 15 percent

or more per year since 1987. The significant expansion of foreign R&D

expenditures in the United States could partially be attributed to several

major acquisitions by foreign multinationals of U.S. firms. Although there

was a widespread surge in the late 1980s in acquisitions in many industries, such as computers, semiconductors, steel, and tires, the largest

Total R&D spending

within the United States

by U.S. firms rose about

57 percent, from $61

billion in 1987 to $96

billion in 1993. In

comparison, R&D

expenditures by U.S.

affiliates of foreign

companies increased by

146 percent during the

same period.

1

 U.S. Department of Commerce, Bureau of Economic Analysis, Foreign Direct

Investment in the United States: Operation of U.S. Affiliates of Foreign Companies

(Washington, DC: Government Printing Office, annual).

2

 National Science Foundation, Division of Science Resources Studies, Selected

Data on U.S. Research and Development in Industry (Washington, DC: National

Science Foundation, annual).
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impact on R&D funding was in the acquisition by U.S. pharmaceutical

and biotechnology firms with large R&D budgets. Ciba Geigy’s purchase

of a 49.9 percent stake in Chiron and Hoffman LaRoche’s investment in

Genentech are examples.

As previously mentioned, R&D expenditures by foreign companies in the

United States have grown much faster than total R&D expenditures by

U.S.-owned firms within the United States. Total R&D spending within

the United States by U.S. firms rose about 57 percent, from $61 billion in

1987 to $96 billion in 1993. In comparison, R&D expenditures by U.S.

affiliates of foreign companies increased by 146 percent during the same

period. As shown in Figure 1, the foreign share of total company spending in R&D reached a plateau of about 9 percent from 1981 to 1985, but

then quickly increased in the second half of the 1980s.

A major upward revision of the NSF data for the period since 1989 makes

it difficult to compare trends in the foreign share of U.S. R&D in the 1990s

with earlier periods. As a result of a new sample design, the NSF data

now better reflect R&D performance among firms in the service sector

and small firms in all industries and resulted in increased estimates of

industrial R&D in the United States by 15 to 20 percent in the 1990s. The

dip in the foreign share of U.S. R&D in 1991 shown in Figure 1 is primarily due to the revised upward shift in the NSF data used in the denominator; R&D by foreign-affiliated companies continued to expand in 1991,

although at a slower rate, 3 percent. (See Figure 2.) The percentage of

foreign-funded R&D out of total company-funded R&D with the revised

NSF data was 14.5 percent in 1992, compared with 17.3 percent using the

previous NSF series in the denominator.

Country Shares

R&D spending within the United States by foreign-owned businesses

increased $8.1 billion between 1987 and 1993. Most of the growth has

come from an increase in R&D spending by U.S. affiliates of multinational

companies from four countries: Japan, United Kingdom, Switzerland, and

Germany (Table 1). Japanese-funded R&D in the United States, which

increased from $307 million in 1987 to $1.8 billion in 1993, experienced the

most rapid rate of growth.

Japan ranked fifth in total U.S. R&D spending by affiliates in 1993, behind

Switzerland ($2.52 billion), Germany ($2.32 billion), United Kingdom

($2.30 billion), and Canada ($2.19 billion). Japan’s share of the U.S. total

Japanese-funded R&D in

the United States, which

increased from $307

million in 1987 to $1.8

billion in 1993,

experienced the most

rapid rate of growth.
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R&D expenditures by foreign-owned companies in the United States (12.2

percent) trailed the shares of Switzerland (17.2 percent), Germany (16

percent), United Kingdom (15.7 percent), and Canada (15 percent) but

was significantly larger than the shares of France (8.2 percent) and the

Netherlands (4.7 percent).

Industry Distribution

Foreign-affiliated companies are concentrating their U.S. research activities on a few industry sectors, reflecting to a large degree the industry

concentration of their direct investments in the United States. The industry composition for affiliates of foreign-owned companies from the BEA

survey data is shown in Figure 3. In 1993, U.S. R&D spending by foreignowned companies was concentrated in three industries: drugs, electronics, and industrial chemicals, which accounted for more than 60 percent of

R&D expenditures by foreign-owned companies in the United States.

These companies spent far less of their U.S. R&D funds on machinery

(excluding computers) and transportation equipment than U.S. companies. About 12 percent of R&D funds were allocated to nonmanufacturing

—services and wholesale trade.

In 1993, U.S. R&D

spending by foreignowned companies was

concentrated in three

industries: drugs,

electronics, and

industrial chemicals,

which accounted for more

than 60 percent of R&D

expenditures by foreignowned companies in the

United States.
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Table 1. R&D Expenditures and Employment by

Affiliates of Foreign Companies

Expenditures

1987 1993 R&D Employees

Country ($ millions) (thousands)

All countries 6,521 14,618 105.2

Switzerland 765 2,524 14.7

Germany 1,139 2,321 19.2

United Kingdom 833 2,295 20.0

Japan 307 1,781 11.8

France 366 1,204 9.3

Netherlands 542 691 6.3

Canada* 1,666 2,190 10.3

*Canadian affiliates include a major U.S. chemical company with a

minority Canadian investment.

Source: BEA, Foreign Direct Investment in the United States.
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Another measure of the concentration of the R&D expenditures of U.S.

affiliates of foreign companies in high-technology industries is the

amount of spending relative to the NSF survey data for R&D by all

companies (see Table 2). U.S. affiliates accounted for 45 percent of total

private R&D funding in industrial chemicals and plastics and synthetics,

38 percent of all funding in drugs and medicines (including biotechnology), and 33 percent of audio, video, and communications equipment.

High concentrations of foreign funding in R&D in these industries generally reflect the concentration of foreign ownership of businesses in these

industries, as measured by sales or employment. Establishment data on

foreign-owned shares of U.S. industries from a joint survey program by

BEA and the Bureau of the Census for 1991 show that foreign-owned

establishments accounted for nearly 30 percent of shipments for industrial inorganic chemicals, 40.5 percent of plastic materials, 37.4 percent of

drugs, 11.7 percent of computer equipment, 25.3 percent of communications equipment, 71.5 percent of household audio and video, 13 percent of

electronic components, and 12.8 percent of instrumentation.3

3

 BEA and Bureau of the Census, Foreign Direct Investment in the United States:

Establishment Data for Manufacturing, 1991 (Washington, DC: U.S. Government

Printing Office, April 1994).
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2. FOREIGN R&D FACILITIES IN THE UNITED STATES

The basis of the material in this section is the list in Appendixes A and B

of 645 foreign-owned R&D facilities in the United States. Appendixes A

and B list the foreign R&D facilities in the United States by industry and

by source country, respectively. The Office of Business and Industrial

Analysis of the Economics and Statistics Administration, U.S. Department

of Commerce, compiled the list from several sources. Most of the information on foreign R&D facilities in this list was provided by companies

through directory surveys and public announcements, although the

authors did not attempt to verify the accuracy of every listing and generally relied on company classification and definition of an R&D facility.

Earlier versions of the list in Appendixes A and B have been published

previously, but this report includes the latest expanded data.4

4

 See Donald H. Dalton and Manuel G. Serapio, Jr., U.S. Research Facilities of

Foreign Companies (U.S. Department of Commerce, NTIS, Office of Japan

Technology, PB93-134328, January 1993).

Table 2. Percentage of R&D Expenditures by U.S.

Affiliates to R&D by All Companies for

Selected High-Technology Industries, 1993

U.S. Affiliates All Companies Percent of

Industry ($ millions) ($ millions) Total R&D

Industrial

chemicals 2,329 5,152 45.2

Drugs and

medicines 3,370 8,822 38.2

Computers

and office equip. 765 10,650 7.2

Audio, video,

comm. equip. 1,135 3,435 33.0

Electronic

components 282 3,428 8.2

Scientific and

prof. instruments 588 7,426 7.9

Sources: BEA (U.S. affiliates) and NSF (all companies).
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Definition of a Foreign R&D Facility in the United States

For purposes of this report, we define a foreign R&D facility in the United

States (also referred to as an R&D center, R&D company, or R&D laboratory) as a freestanding R&D company site (i.e., a facility engaged mainly

in R&D) of which 50 percent or more is owned by a foreign parent company. The R&D facility typically operates under its own budget, is overseen by its own group of officers, and is located in a freestanding facility

Table 3. Foreign R&D Facilities in the United States, 1994

Country Companies Facilities

All countries 306 645

Japan 107 225

United Kingdom 61 109

Germany 32 95

France 22 52

Switzerland 16 47

Netherlands 11 26

Korea 10 27

Sweden 14 22

Canada 5 8

Italy 6 8

Finland 5 5

Denmark 3 4

Belgium 1 2

Norway 2 2

Australia 2 2

Israel 2 2

Taiwan 2 2

Austria 1 1

Ireland 1 1

Spain 1 1

Hong Kong 1 1

Singapore 1 1

Venezuela 1 1

Netherlands Antilles 1 1

Source: Appendix B.

The R&D facility

typically operates under

its own budget, is

overseen by its own

group of officers, and is

located in a freestanding

facility outside of and

separate from the other

U.S. facilities (e.g., sales

and manufacturing

facilities) of the parent

company.
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outside of and separate from the other U.S. facilities (e.g., sales and

manufacturing facilities) of the parent company.

Our definition of an R&D facility excludes R&D departments or sections

within the U.S. affiliates (e.g., marketing offices and manufacturing

plants) of foreign-owned companies. (R&D expenditures performed by

U.S. affiliates of foreign-owned businesses are discussed in Chapter 1 of

this report.) For example, Toyota Motor Corporation conducts R&D at

Toyota Technical Center in Torrance, CA. Toyota’s manufacturing affiliate,

New United Motor Manufacturing Inc. (NUMMI), also conducts R&D on

a limited basis in its plant in Fremont, CA. We define the former (i.e.,

Toyota Technical Center in Torrance) as a foreign R&D facility and the

latter (R&D done at NUMMI) as R&D expenditures performed by a U.S.

affiliate of a foreign company.

Our definition also excludes R&D performed by third-party organizations, such as R&D conducted by U.S. research universities, or third-party

contractors that are financed by a foreign company. In addition, our

definition only includes those foreign R&D facilities in the United States

of which 50 percent or more are owned by the foreign parent company.

Because we rely on company classifications of R&D facilities, the range of

activities may vary across industries and nationalities, and includes

activities that are not strictly R&D (i.e., product customization, design

centers, and technology scanning).

R&D Facilities, by Country and by Industry

Table 3 and Appendix A list 645 R&D facilities that are wholly or partially

owned by 309 foreign companies. As shown by Table 3, the 225 Japanese

R&D facilities in the United States far outnumber the U.S. R&D facilities

of other countries, accounting for nearly 35 percent of the 645 total

foreign-owned facilities. United Kingdom is second with 109 facilities,

followed by Germany (95), France (52), and Switzerland (47). South Korea

has a growing R&D presence in the United States, with 27 R&D facilities.

The large number of U.S. R&D laboratories of Japanese companies is

partially a result of the relatively large number of Japanese parent companies with R&D facilities in the United States—107 companies in 1994,

compared with 61 British parent companies, 32 German parent companies, and 22 French parent companies.

Japanese R&D facilities

in the United States far

outnumber the U.S.

R&D facilities of other

countries, accounting for

nearly 35 percent of the

645 total foreign-owned

facilities.
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In terms of industry distribution, the industries with the largest number

of foreign-owned R&D centers in the United States are drugs and biotechnology (116 facilities), chemicals and rubber (110 facilities), automotive

(53 facilities), computer software (43 facilities), and computers (39 facilities). Japanese companies account for most of the R&D centers in the

electronics and automotive industries, while European companies have

far more drugs and chemicals R&D laboratories. (See Table 4.)

Size: Largest R&D Facilities

Table 5 lists the largest foreign research centers in the United States in

terms of staff size. The largest foreign laboratories are concentrated in

pharmaceuticals, automotive, and electronics. Of the 35 foreign R&D

facilities in Table 5, 24 are owned by European companies. The majority of

these European R&D facilities are in pharmaceuticals and biotechnology.

Table 4. U.S. R&D Facilities of Foreign Companies, 1994

Industry Japan Germany Korea Nether- United Switzer- Sweden France Others

lands Kingdom land

Computers 22 4 7 3 3

Computer software 27 4 1 1 6 3 1

Semiconductors 19 3 10 2

Telecommunications 15 4 1 2 1 2 2 3

Optoelectronics 11 3 2 1 3

High-definition TV, 33 9 4 4 10 5 4 3

other electronics

Drugs, bio-technology 25 18 1 5 23 17 6 11 9

Chemicals, rubber, 24 28 4 19 10 17 8

materials

Metals 5 1 3 1 1 4 2

Automotive 34 11 3 1 2 2

Machinery 7 2 4 6 3 5

Instrumentation, controls 1 3 3 23 6 1 6

Foods, consumer 7 6 7 19 6 1 2 7

goods, misc.

Source: Appendix A. Columns include double counting of facilities that perform R&D in more than one industry.
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Table 5. Largest Foreign Research Centers in the United States

Company Location Prof. Staff

1. Pharmacia (SWE) Upjohn Laboratories, Kalamazoo, MI 1,318

2. Northern Telecom (CAN) Research Triangle Park, NC 1,260

3. SmithKline Beecham (UK) King of Prussia, PA 1,198

4. Siemens (GER) Iselin, NJ 1,100

5. Glaxo (UK) Research Triangle Park, NC 1,000

6. Burroughs Wellcome (UK) Research Triangle Park, NC 891

7. Honda (JA) Marysville, OH (2); Torrance, CA; Denver, CO 800

8. Hoechst (GER) Somerville, NJ 716

9. Hoffman-LaRoche (Swiss) Genentech, San Francisco, CA 672

10. Sony (JA) San Jose, CA 600

11. Bayer (GER) Miles, West Haven, CT 500

12. Glaxo (UK) Sterling Drug, Rensselaer, NY 450

13. Hoechst (GER) Marion Merrell Dow, Kansas City, MO 411

14. Nestle (Swiss) Westreco, New Milford, CT 410

15. Nestle (Swiss) Alcon Labs, Fort Worth, TX 404

16. Rhone-Poulenc (FR) Fort Washington, PA 400

17. Bayer (GER) Miles, Pittsburgh, PA 389

18. Hoffman-LaRoche (Swiss) Nutley, NJ 350

19. Toyota (JA) California (4), Ann Arbor, MI 350

20. Rhone-Poulenc (FR) Research Triangle Park, NC 350

21. Unilever (NE/UK) Edgewater, NJ 329

22. Nissan (JA) Farmington, Ann Arbor, MI; Los Angeles, CA 320

23. Northern Telecom (CAN) San Ramon, CA 319

24. Northern Telecom (CAN) Rochester, NY 280

25. PA Consulting (UK) Hightstown, NJ 250

26. Zeneca (UK) Wilmington, DE 245

27. Moore (CAN) Grand Island, NY 235

28. Thomson (FR) Indianapolis, IN 230

29. Mazda (JA) Flat Rock, Ann Arbor, MI; Irvine, CA 213

30. Racal (UK) Sunrise, FL 209

31. Goldstar (KO) United Micro Tech, NJ 200

32. Siemens (GER) Gammasonics, Hoffman Estates, IL 200

33. Siemens (GER) Rolm, Boca Raton, FL 200

34. OSRAM (GER) Sylvania, Danver, MA 200

35. Dainippon Ink Reichold Chemicals, Research Triangle Park, NC 186

& Chemical (JA)

Source: Compiled by the authors from Directory of American Research and Technology (New Providence, NJ:

R.R. Bowker, Inc., 1994).
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Japanese companies account for about 20 percent of the companies listed

in Table 5, mostly in the automotive industry.

Although staff size is not available for all of the 645 R&D facilities listed

in Appendixes A and B, the available data indicate that the pharmaceutical, biotechnology, and automotive R&D laboratories are much larger

than the electronics R&D facilities. In the electronics industry, the available data also indicate that Japanese R&D centers in the United States are

much smaller than their European counterparts. This finding could be

explained by the fact that several of the Japanese laboratories are much

newer and have not yet reached full staffing. In addition, the disparity in

staff size between the European and Japanese companies could be attributed to a difference in research focus. Japanese electronics companies tend

to focus their R&D on a single technology at each site in the United

States,5

 while European firms tend to establish large central laboratories

covering many technologies. However, it is important to note that some

Japanese companies (e.g., Sony) are consolidating their electronics R&D

operations in fewer locations in California.

Location

Foreign R&D facilities in the United States are highly concentrated in

some areas of the country, as shown in Figure 4. Japanese companies

initially established R&D laboratories in California and recently have

begun moving east, while European companies began on the East Coast

and are moving west. The largest concentration of R&D facilities is in

California’s Silicon Valley, which attracted large numbers of laboratories

in computers, semiconductors, and computer software. The Los Angeles

metropolitan area has a smaller number of R&D facilities with a more

diverse group of companies, including auto design and styling centers.

Another major cluster of R&D centers is in New Jersey, especially around

Princeton University. Many of the major European drug and chemical

companies have located near U.S. drug company research centers in New

Jersey, and to a lesser degree in Pennsylvania and Connecticut. Research

Triangle Park in North Carolina ranks third and is a center for biotechnology research for both U.S. and foreign companies. The Boston area ranks

fourth, especially for its proximity to computer companies and access to

Massachusetts Institute of Technology (MIT) faculty.

5

 For a discussion of single-technology facilities by Japanese companies, see

Eleanor Westney, “Cross-Pacific Internationalization of R&D by U.S. and

Japanese Firms,” R&D Management, Vol. 23 (2), 1993.

Japanese companies

initially established

R&D laboratories in

California and recently

have begun moving east,

while European

companies began on the

East Coast and are

moving west.
Globalizing Industrial Research and Development 21

OFFICE OF TECHNOLOGY POLICY

Some areas are highly specialized in certain industries, such as Detroit for

automotive laboratories and Richardson, TX, for telecommunications

research facilities. Specialized expertise in certain university departments

has attracted biotechnology laboratories to the Seattle (University of

Washington) area, while the Boulder-Denver-Longmont area (University

of Colorado) has attracted computer disk drive labs.

Table 6 lists the states with most R&D facilities of foreign companies with

major R&D investments in the United States. Although the facilities are

located across 30 to 40 states, the major source countries have their facilities in states with large concentrations of R&D facilities by U.S. companies and proximity to research universities.

Nature and Scope of Operations

Automotive Industry—Of the 53 automotive R&D facilities listed in

Appendix A, 34 are Japanese companies, 16 are European companies, and

three are South Korean companies. The U.S. R&D facilities of automotive

companies—Japanese automotive companies in particular—conducted

little R&D when they first started operations in the United States. Instead,

their main activities were testing emissions for certification requirements

The major source

countries have their

facilities in states with

large concentrations of

R&D facilities by U.S.

companies and proximity

to research universities.
22 Globalizing Industrial Research and Development

OFFICE OF TECHNOLOGY POLICY

and scanning the regulatory environment. They also evaluated the performance of their own and competitors’ vehicles and monitored U.S. automotive design and styling trends.

Since the late 1980s, foreign automotive companies, especially Toyota,

Nissan, Mazda, and Honda, have expanded the scope of their R&D

activities in the United States. Several facilities have undertaken projects

in advanced concept design (i.e., the design of future vehicles), joint

research, and vehicle prototype production. Also, these facilities have

become more involved in parts and materials design and evaluation of

local suppliers. An example of such higher valued-added activities is the

lead involvement by Toyota’s Calty Research Design Center, in California,

in the exterior design of the Lexus/Soarer Coupe. Mazda’s design center

in California also assisted in developing the Miata sports car, and

Honda’s U.S. research facilities in Ohio played a major role in developing

a new Accord model for the U.S. market.

Drugs and Biotechnology—The pharmaceutical and biotechnology

industries account for the largest number of foreign R&D facilities in the

United States, with 113 facilities in 1994. These industries also have the

largest (in terms of staff size) foreign-owned R&D facilities in the United

States and are the primary area for basic research by foreign companies.

Most of the facilities are owned by European companies, with high

concentrations of German, Swiss, and British drug companies. In addition, many of the European drug companies, such as BASF and Hoechst,

have large operations in the chemicals markets.

Since the late 1980s,

foreign automotive

companies, especially

Toyota, Nissan, Mazda,

and Honda, have

expanded the scope of

their R&D activities in

the United States.

Table 6. States with the Most Foreign R&D Facilities, 1995

State No. of Facilities

California 146

New Jersey 75

North Carolina 32

Ohio 22

Massachusetts 21

Pennsylvania 21

Michigan 20

Note: R&D facilities of major source countries: Germany, United

Kingdom, Japan, Canada, Switzerland, France, Netherlands, Korea.

Source: Compiled from Appendix B.
Globalizing Industrial Research and Development 23

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Foreign investment in U.S. R&D in drugs and biotechnology has been

characterized by acquisitions of U.S. firms. A new wave of mergers is

occurring in the industry. In 1995, several major mergers and acquisitions

were announced: Hoechst’s decision to acquire Marion Merrell Dow; the

merger of two large British companies, Glaxo and Burroughs Wellcome;

and the merger of Upjohn with a Swedish company, Pharmacia. In 1994,

Ciba Geigy, a Swiss company, increased its stake in Chiron, a U.S. biotech

company, to 49.9 percent, and Roche Holding, another Swiss company,

acquired Syntex. Major acquisitions of U.S. companies in earlier years

include Roche’s purchase of a majority stake in Genentech and the acquisition of Rorer by Rhone-Poulenc, a French company. In 1987, the British

firm, Beecham, acquired SmithKline Beckman.

In the biotechnology industry, foreign R&D facilities fall into two basic

groups: laboratories that conduct research in recombinant DNA and

monoclonal antibody technologies, and R&D centers involved in pharmaceuticals, chemicals, and agribusiness. The former are small laboratories

with capitalization of $50 million or less; the former are among the largest

foreign R&D facilities in the United States.6

Electronics—Foreign-owned facilities in the electronics area reflect a

diversity of corporate interests and strategies across many industries,

from the giant European telecommunications equipment and electronics

company facilities to many small single-technology labs operated by

Japanese companies. Japanese R&D facilities far outnumber the R&D

facilities of other countries in computers, semiconductors, and computer

software. Most of the foreign-owned R&D facilities in electronics conduct

applied research with some activities in developing new applications of

existing technologies or products or tailoring products to customer needs.

A small group of facilities conducts basic research. These facilities include

the NEC Research Institute (Princeton, NJ), Philips, Siemens, Canon, and

Panasonic Technologies (Matsushita).

Investment Motives—Foreign companies have invested in R&D facilities

in the United States for different reasons. Table 7 lists 10 reasons cited by

senior R&D/technical executives of foreign R&D facilities in the automotive, biotechnology, and electronics industries. Of these, two reasons were

cited as important by most R&D facilities: to acquire technology and to

keep abreast of technological developments in the United States. As could

be expected, firms that deal with technologies in which U.S. firms conduct leading research (e.g., biotechnology, software design, certain new

6

 For more details, see Manuel G. Serapio, Jr., and Donald H. Dalton, “Foreign

R&D in the United States,” IEEE Spectrum, November 1994.

The pharmaceutical and

biotechnology industries

account for the largest

number of foreign R&D

facilities in the United

States.
24 Globalizing Industrial Research and Development

OFFICE OF TECHNOLOGY POLICY

materials) cite these two reasons as important. Firms that deal with

technologies in which foreign companies lead or are equal to U.S. firms

(e.g., consumer electronics) cite the reasons mentioned above as

unimportant.

The growth of foreign R&D investments in the U.S. automotive industry

is directly linked to the expansion of Japanese and European automotive

manufacturing facilities in the United States. Two reasons cited as important by automotive firms were (1) “assisting the parent company in

meeting U.S. environmental regulations” and (2) “assisting the parent

company in meeting U.S. customer needs.” Other important reasons were

“assisting the parent company’s U.S. manufacturing plants in local procurement” and “keeping abreast of technological developments in the

United States.”

Table 7. Reasons for Foreign R&D Investments in the United States

Given by Senior R&D/Technical Executives

(1 = extremely important, 2 = important, 3 = neutral, 4 = unimportant)

Electronics Autos Biotechnology

Acquire technology 1 2 1

Keep abreast of technological developments 2 2 1

Assist parent company in meeting U.S. customer needs 1 1 3

Employ U.S. scientists and engineers 2 3 2

Follow competition 3 3 4

Take advantage of favorable research environment 4 4 1

Cooperate with other U.S. R&D labs 2 3 2

Assist parent company in meeting U.S.

environmental regulations 4 1 4

Assist parent company’s U.S. manufacturing

plants in procurement 4 2 4

Engage in basic research 3 4 2

Source: Interview survey of Japanese companies by Manuel G. Serapio, Jr., published in Manuel G.

Serapio, Jr., and Donald H. Dalton, “Foreign R&D Facilities in the United States,” Research Technology

Management, Industrial Research Institute, November–December 1993.

Two reasons were cited as

important by most R&D

facilities: to acquire

technology and to keep

abreast of technological

developments in the

United States.
Globalizing Industrial Research and Development 25

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In the biotechnology industry, “taking advantage of a more favorable

environment for research,” “cooperating with other U.S. R&D laboratories,” and “engaging in basic research” were cited as important factors

influencing the decision of foreign firms to invest in U.S. R&D facilities.

Other studies have also noted that “access to U.S. research universities,”

“availability of scientists for employment by foreign-owned employers,”

and “spillovers from U.S. private research” are prime inducements for the

growth in foreign-owned R&D centers in biotechnology and drugs. In

particular, Japanese drug companies appear to be mainly motivated to

gain access to U.S. biotechnology discoveries, partly because of relative

weakness in their domestic biotechnology research capabilities. Japanese

drug companies have established a U.S. presence for other reasons,

including conducting their own clinical testing for new drugs for the U.S.

market and acquiring U.S. technology to bolster competitiveness in the

Japanese market.7

The most important aspect of the favorable research environment in the

United States is a U.S. policy encouraging research in biotechnology and

related fields. Robert Fujimura of the U.S. Food and Drug Administration,

a leading expert in biotechnology, attributes the excellent environment for

research in his field to leading-edge research in life sciences now being

conducted in the United States. He believes that this has been due in part

to substantial and sustained support by the U.S. government and the

participation of top scientists and researchers from all over the world. In

contrast, European firms, and German companies in particular, maintain

that the biotechnology research environment has been largely unfavorable in Europe.

In the electronics industry, “assisting the parent company in meeting U.S.

customer needs” was cited as an important motive for investing in R&D

facilities in the United States. Foreign firms have used their U.S. R&D

facilities to monitor technological developments in the United States,

customize products to the specifications of U.S. customers, and facilitate

concurrent design and development. Another important factor influencing the decision is the growing complexity and speed of innovation in

new technologies. A senior executive of a Japanese company told the

authors that “Acquiring technology has become a more complex task.

Without an actual presence in the United States, it is difficult for us to

judge what technology is worth buying from U.S. companies. We built

7

 Tom Roehl, The Role of International R&D in the Competence-Building Strategies of

Japanese Pharmaceutical Firms, College of Commerce and Business

Administration, University of Illinois at Urbana-Champaign, CIBER Working

Paper No. 94-008, 1994.

The most important

aspect of the favorable

research environment in

the United States is a

U.S. policy encouraging

research in biotechnology

and related fields.
26 Globalizing Industrial Research and Development

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our R&D centers in the United States to establish a base that will help us

make these decisions.” An executive from a software company expressed

a similar opinion that the rapidity of technological change in the computer software industry dictated the company’s presence in the United

States in order to “keep up with day-to-day developments” in the U.S.

software industry.

3. U.S. R&D FACILITIES ABROAD: A COMPARISON

Are European, Japanese, and other foreign companies the only organizations expanding their overseas R&D operations? As shown by Figure 5,

U.S. companies are also increasing their R&D activities abroad. According

to the NSF survey, R&D expenditures by U.S. multinational companies

have nearly doubled since 1987, increasing from $5.2 billion in 1987 to

$9.8 billion in 1993. R&D expenditures by American companies abroad

accounted for an additional 11 percent of all private U.S. expenditures on

R&D in 1993, up from 6.4 percent in 1985 and 8.5 percent in 1987.8

 ComForeign firms have used

their U.S. R&D facilities

to monitor technological

developments in the

United States, customize

products to the

specifications of U.S.

customers, and facilitate

concurrent design and

development.

8

 Both the NSF and BEA publish annual data on U.S. R&D abroad based on

company surveys. The NSF data series provides data only for industry

classifications; the BEA series publishes separate data for industries and

countries. U.S. R&D abroad is not included in the NSF series on companyfunded R&D because it is not performed within the United States.
Globalizing Industrial Research and Development 27

OFFICE OF TECHNOLOGY POLICY

pared with overseas sales, which are more than 30 percent of total sales of

U.S. multinational companies, most of the R&D expenditures by these

companies are spent at their U.S. facilities. The slight decline in U.S. R&D

abroad in 1993 may indicate a slowdown in the rate of growth, reflecting

the recent problems in U.S. industrial R&D funding.

In 1993, most of the expenditures on U.S. R&D abroad were concentrated

in drugs, chemicals, automotive, computers, and services. The largest

R&D expenditures by U.S. multinationals in 1993 were in Germany

($2.6 billion), United Kingdom ($1.6 billion), Canada ($1.0 billion), and

France and Japan ($0.9 billion each). U.S. R&D investments in newly

industrializing countries have increased significantly, with Singapore

ranked 10th in U.S. R&D expenditures abroad, followed by Brazil, ranked

12th (see Table 8).

Direct investments by U.S. multinational companies are nothing new. U.S.

multinational firms such as IBM, Caterpillar, and Union Carbide, have

operated R&D facilities abroad for many years. In a pioneering study of

R&D abroad by U.S. multinational companies, Robert Ronstadt noted that

IBM spent about $200 million (roughly 30 percent of its budget) in 1974 in

overseas R&D. Other companies, such as Otis Elevator, CPC International, and Exxon, spent 50 percent, 38 percent, and 25 percent of their

R&D budgets, respectively, in overseas R&D in the 1970s.9

R&D Facilities

An NSF study identified 70 U.S. R&D facilities in Japan, including joint

ventures, which employed more than 5,000 people.10 Of these facilities,

more than half were established or acquired during the past seven years.

Some of the newly established U.S. R&D facilities in Japan include Apple

Computers and Texas Instruments. General Motors recently expanded its

technical center, GM Asian Technical Center, in Japan. Likewise, Ford

Motor Company has announced plans to expand its R&D presence in

Japan. Other companies with a long-standing presence in Japan include

IBM, DEC, and Caterpillar.

R&D expenditures by

U.S. multinational

companies have nearly

doubled since 1987,

increasing from $5.2

billion in 1987 to $9.8

billion in 1993.

9

 Robert C. Ronstadt, Research and Development Abroad by U.S. Multinationals

(New York, NY: Praeger, 1977).

10 National Science Foundation, Survey of Direct U.S. Private Capital Investment in

Research and Development Facilities in Japan, NSF 91-312, 1991.
28 Globalizing Industrial Research and Development

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Appendix C provides a partial list of U.S. R&D facilities abroad. Of the

more than 108 U.S. R&D facilities listed in Appendix C, 62 are in Europe,

29 in Japan, 14 in Canada, 2 in Brazil, and 1 in Singapore. These facilities

cover a wide range of industries, including computer hardware, software,

consumer electronics, automotive, pharmaceuticals, consumer products,

and chemicals.

Comparison of Investment Motivations

A recent study published by the Japan Technology Program of the U.S.

Department of Commerce compared the motivations and activities of U.S.

electronics R&D facilities in Japan and Japanese facilities in the United

States. The single most important investment motives cited in the interOf [U.S. R&D facilities

in Japan], more than half

were established or

acquired during the past

seven years.

Table 8. Expenditures for U.S. R&D Abroad, by Country

1989 1993

Country ($ millions)

 1. Germany 1,496 2,568

 2. United Kingdom 1,673 1,639

 3 Canada 914 1,030

 4. France 545 942

 5. Japan 488 862

 6. Ireland 134 669

 7. Belgium 317 460

 8. Netherlands 360 392

 9. Spain 115 321

10. Singapore 25 312

11. Italy 294 304

12. Brazil 90 220

13. Australia 181 176

14. Switzerland 67 109

15. Mexico 37 76*

16. Hong Kong n/a 74

17. Sweden 33 48

Total 7,048 10,954

* 1992 R&D data.

Source: BEA, U.S. Direct Investment Abroad, annual.
Globalizing Industrial Research and Development 29

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view study of both U.S. R&D in Japan and Japanese R&D in the U.S. were

as follows:

1. Assist the parent company in meeting the host country company

needs.

2. Monitor technological developments.

3. Acquire/generate new technology.

The most important location decision for U.S. R&D in Japan and Japanese

R&D in the United States was “availability of scientists and engineers,”

and the majority of facilities focused primarily on applied research and

development.11

4. R&D GLOBALIZATION ISSUES

Rapid growth of foreign R&D in the United States has led to concerns

about an erosion of U.S. science and technology leadership, a potential

decline in U.S. industrial competitiveness, and the clustering of foreign

R&D centers around major U.S. research universities that receive large

shares of their funding from federal grants and other taxpayer support.

Some observers have questioned the quality of the research effort by

foreign companies; others have raised doubts about the importance of the

globalization of R&D.

Direct Benefits

One area of consensus concerns the short-term benefits. Direct benefits to

the United States include funding for R&D within the United States and

employment opportunities for U.S. scientists and engineers. In 1993

foreign companies spent $14.6 billion in the United States on R&D and

employed 105,200 R&D workers. Without the foreign spending in recent

years, U.S. company-funded R&D performed in the United States would

have been stagnant or declined. Foreign funding of academic research

and equipment purchases has been welcomed by university researchers

in a period of declining federal funding.

11 Manuel G. Serapio, Japan-U.S. Direct R&D Investments in the Electronics

Industries.

Direct benefits to the

United States include

funding for R&D within

the United States and

employment

opportunities for U.S.

scientists and engineers.
30 Globalizing Industrial Research and Development

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Foreign-funded R&D has similar local spillovers and indirect benefits

compared with U.S. R&D.12 Local communities benefit from the presence

of highly paid scientists and engineers and spinoffs of research into new

companies. Other U.S. companies in the same industry may benefit from

the new products and processes developed from basic research by foreign

companies. A study by Coe and Helpman suggests that international

R&D may lead to an increase in economic growth.13

R&D Intensity

Some observers have argued that the U.S. research centers of foreign

companies are merely “listening posts” that focus on technology scanning

with only a small research effort. Although this description may have

applied to the early stages of U.S. research by affiliates, foreign firms have

committed substantial resources, $14.6 billion in 1993, to their U.S. research facilities. The expenditure on R&D of U.S. affiliates of foreign

companies was 2.6 percent of sales in 1992, compared with 3 percent for

all U.S. companies. However, the R&D to sales ratio varies across industries, and the percentage was much larger in the pharmaceutical industry,

11.7 percent for affiliates, than for U.S. drug companies, 9.7 percent.14 In

our study, we found that Japan’s automotive R&D has moved from an

early stage of design work and emissions testing to more value-added

research in developing new vehicles for the U.S. market. A major effort in

basic research is conducted by affiliates in the chemicals, drugs, and

biotechnology industries.

Extent of Globalization

Another issue in the debate about the quality of U.S. R&D by foreign

companies is based on studies that raise questions as to whether

globalization of R&D is an important source of new technology. A recent

12 For a detailed analysis of local R&D spillovers see Adam B. Jaffe, Manuel

Trajtenberg, and Rebecca Henderson, “Geographic Localization of Knowledge

Spillovers as Evidenced by Patent Citations,” Quarterly Journal of Economics,

August 1993.

13 David T. Coe and Elhanan Helpman, International R&D Spillovers, National

Bureau of Economic Research, Working Paper, No. 4444, August 1993.

14 For more detailed data on the R&D intensity of U.S. affiliates of foreign

companies and a comparison with U.S. R&D intensity, see William J. Zeile,

“Foreign Direct Investment in the United States: 1992 Benchmark Survey

Results,” Survey of Current Business (Washington, DC: July 1994).
Globalizing Industrial Research and Development 31

OFFICE OF TECHNOLOGY POLICY

report by the Office of Technology Assessment concluded from an interview study of U.S. R&D managers that leading-edge R&D on a

company’s “core” technology is performed only at a company’s central

labs in the home country.15 Some empirical research by Patel and Pavitt on

the location of patents by large multinational companies shows that most

of their patents are filed in the home country.16 The results from patent

data are supported by the expenditure data on U.S. firms’ R&D abroad,

which show that about 90 percent of R&D expenditures by U.S. companies are spent at their facilities in the United States. Cantwell found

similar results for British companies on the concentration of R&D in the

home country.17

Technology Transfer

New research has begun to look at some indirect benefits from the crossfertilization of research between parent labs and their U.S. subsidiaries.

Methe has found that long-term benefits from overseas research require

organizational learning in the parent firm, characterized by a “double

loop” of two-way flows of technology that becomes well integrated into

the parent firm.18 Too often, cross-border research involves “content

knowledge” in reporting information on new discoveries, rather than

“process knowledge,” which involves learning about the process of U.S.

basic research that can be used by the parent firm. The interaction between the R&D of the parent and that of its U.S. affiliate may have longterm benefits for the U.S. R&D community because 90 to 95 percent of the

affiliates’ R&D employees are U.S. scientists and engineers who can

transfer this experience to other U.S. R&D companies.

15 For a discussion of a survey of U.S. firms about their “core” technology, see

U.S. Congress, Office of Technology Assessment, Multinationals and the U.S.

Technology Base, Washington, DC: September 1994.

16 Pari Patel and Keith Pavitt, “Large Firms in the Production of the World’s

Technology: An Important Case of Non-Globalization,” Journal of International

Business Studies First Quarter, 1991.

17 J.A. Cantwell and C. Hodson, “Global R&D and British Competitiveness,” in

M.C. Casson (ed.) Global Research Strategy and International Competitiveness,

Oxford: Basil Blackwell, 1991.

18 David Methe and Joan Penner-Hahn, Joan, Globalization of Japanese

Pharmaceutical Research and Development: Implications for Organizational Learning

(School of Business Administration, University of Michigan, Presentation at the

Association of Japanese Business Studies annual meeting, Ann Arbor, June

1995).

A recent report...

concluded that leadingedge R&D on a

company’s “core”

technology is performed

only at a company’s

central labs in the home

country.
32 Globalizing Industrial Research and Development

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In summary, foreign R&D in the United States has some clear benefits in

taking up the slack from the cutbacks by large U.S. R&D firms and the

reduction in federal funding. The foreign share of U.S. company-funded

R&D has grown with the foreign ownership share in the U.S. economy.

Foreign-owned companies account for about 15 percent of U.S. manufacturing output,19 and their share of U.S. company-funded R&D is in the

same range. The global economy enables U.S. companies to benefit from

foreign technical advances, and technical alliances with foreign-funded

R&D centers in the United States and global networks can add to the

technical base of the United States.

BIBLIOGRAPHY

Cantwell, J.A., and C. Hodson. “Global R&D and British Competitiveness.” In Global Research Strategy and International Competitiveness, edited

by M.C. Casson. Oxford: Basil Blackwell, 1991.

Cheng, Joseph, and Douglas S. Bolon. “The Management of Multinational

R&D: A Neglected Topic in International Business Research.” Journal of

International Business Studies, First Quarter, 1993.

Choy, J. “Japan’s Growing Role in U.S. Research: Bane or Boon?” Japan

Economic Institute, JEI Report, September 25, 1992.

Coe, David T., and Elhanan Helpman. International R&D Spillovers. National Bureau of Economic Research, Working Paper No. 4444, Cambridge, MA, August 1993.

Dalton, Donald H., and Manuel G. Serapio, Jr. U.S. Research Facilities of

Foreign Companies, U.S. Department of Commerce, NTIS, Office of Japan

Technology, NTIS PB93-134328, Springfield, VA, January 1993.

Directory of American Research and Technology, 28th ed. New Providence, NJ: Bowker, R.R., Inc., 1994.

Florida, Richard. “Technology Policy for a Global Economy.” Issues in

Science and Technology. Spring 1995.

19 BEA and Bureau of the Census, Foreign Direct Investment in the United States:

Establishment Data for Manufacturing, 1991.

The interaction between

the R&D of the parent

and that of its U.S.

affiliate may have longterm benefits for the U.S.

R&D community

because 90 to 95 percent

of the affiliates’ R&D

employees are U.S.

scientists and engineers

who can transfer this

experience to other U.S.

R&D companies.
Globalizing Industrial Research and Development 33

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Florida, Richard, and Martin Kenney. “The Globalization of Japanese

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Graham, Edward. “Japanese Control of R&D Activities in the United

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Kogut, Bruce, and Sea Jin Chang. “Technological Capabilities and Japanese Foreign Direct Investment in the United States.” The Review of Economics and Statistics, August 1991.

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1979.

Methe, David. Globalization of Japanese Pharmaceutical Research and

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Miller, R. “Global R&D Networks and Large-Scale Innovations: The Case

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Patel, Pari, and Keith Pavitt. “Large Firms in the Production of the

World’s Technology: An Important Case of Non-Globalization.” Journal of

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Pearce, Robert D. The Internationalization of Research and Development by

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