Servizio Comunitario di Informazione in materia di Ricerca e Sviluppo - CORDIS

Technology strategies of large European Firms

This part of the project has been concerned with using publicly available data on R&D expenditures and on US patenting to analyse the technological competitiveness and strategies of large European companies. This section summarizes the main findings of the project and discusses their policy implications.

1. European Technological Competitiveness.
There are a number of European companies that rank amongst the world leaders in a number of industries and technologies. In general, areas of EU strength are characterized by a greater numerical presence of European-based firms, e.g. in Chemicals, Pharmaceuticals, Food, and Aerospace. On the other hand, in areas of weakness there are very few European companies compared to those based in Japan and the US: Electronics, Vehicles, Machinery and Metals.

In terms of measurement, there appears to be very little consistency amongst ‘within industry’ company rankings based on different measures constructed from R&D and patent information. One reason could be the lack of a ‘time-series’ dimension in the data on R&D expenditures.

2. The role of Large Firms.
Large firms are a major source of national technological activities especially in the so called ‘high-tech’ areas of Chemicals-Pharmaceuticals and Electronics.

Foreign large firms (i.e. those based in Japan and the US) are important contributors to EU technology especially in Chemicals-Pharmaceuticals and Electronics. On the other hand in Japan and the US, the contribution of foreign firms is much smaller.

3. Internationalisation of technology
Whether as individual countries or collectively, European technological activities are
more internationalised than those of their Japanese and American counterparts. However, in spite of some increases since the early 1980’s technology development remains the least internationalised of all corporate activities. The main patterns of internationalisation can be summarized as follows:

Firms are active outside their home countries in those areas of technology where there have been big increases in R&D expenditures and where they have formed strategic alliances (National Science Board, 1996): pharmaceuticals, computers, telecommunications, and materials. However quite a sizeable part of their foreign activities, regardless of product group and nationality, are concerned with improvements in process technology and machinery.

In terms of locations there is a high level of concentration of foreign technological activities in just 3 countries: the most important foreign location is the US followed by Germany and the UK. In the mid-1990's, Japan is still unimportant as a host country.

In a large majority (more than three quarters) of cases, firms tend to locate their technology abroad in their core areas where they are strong at home. In a small minority of cases (10%), firms go abroad in their areas of weakness at home to exploit the technological advantage of the host country.

The largest increases, especially for chemical and pharmaceutical companies, have been in technical fields where there are complementary strengths between the domestic activity of a company and the host country.

In relation to the motives for foreign technological activities, our results suggest that adapting products and processes and materials to suit foreign markets and providing technical support to offshore manufacturing plants remains a major factor. They are also consistent with the notion that firms are increasingly engaging in small scale activities to monitor and scan new technological developments in centres of excellence in foreign countries within their areas of existing strength. However we find very little evidence to suggest that firms routinely go abroad to compensate for their weakness at home.

Two key features related to the launching of major innovations may help explain why large firms involved in producing for a world market may keep a large part of their technology production close to the home base: the involvement of inputs of knowledge and information that are essentially 'person-embodied', and a high degree of uncertainty surrounding outputs. Both of these are best handled through intense and frequent personal communications and rapid decision making, i.e. through geographic concentration. Thus it may be most efficient for firms to concentrate the core of their technological activities in the home base with international 'listening posts' and small foreign laboratories for adaptive R&D.

The major point here is that the knowledge assets existing in the territories constitute the building blocks of the development of the technology strategies of the large firms: the firms can be viewed as knowledge networks relating the territories in which they are active. The question then is to characterize in an empirical and quantitative way such network of relations, particularly those linking the firms knowledge assets (centered on the RD laboratories) and the territories knowledge assets (centered on public research facilities).

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Observatoire des Sciences et des Techniques
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Evaluation - Policies