Go west for fame and fortune? The role of internationalization in the growth of Chinese telecom firms

This paper focuses on the role played by internationalization in the growth of Chinese telecom firms by comparing the three cases from China’s telecom sector – Huawei Technologies (Huawei), Zhongxing Telecom Equipment Corporation (ZTE), Datang Telecom Technology (Datang). Faced with a global market that was strongly oligopolistic and dominated by Western firms, we show that internationalization strategies triggered by resource seeking played different roles in the growth strategies of these three firms. The contrasting fortunes of these firms also underscores the fact that the success of internationalization strategies of firms from emerging markets cannot be understood without reference to the global competitive environment faced by firms

Patent incentives: Returns to patenting and the inducement for research & development (R&D)

The UK has one of the oldest and best regarded intellectual property rights (IPR) regimes in the world. Yet there is little evidence on private returns to patenting for firms operating in the UK, and on the incentive effects of patenting in encouraging R&D investment in patenting firms. Using available data from the UK innovation survey (known as the Community Innovation Survey or CIS) and linked business performance data the report assesses both the additional returns firms achieve by patenting, and the effects on R&D spending. This report tests an economic model built upon the following intuition. The monopoly power conferred by a patent provides a firm a price premium in new product revenue, thus increasing profitability. At the same time this increased profitability also acts as an inducement to increase R&D spending by the firm. Using this idea we try to jointly estimate the extent of the premium and the inducement to R&D. In this way the research builds and extends work in two literature streams, viz. the economic literature on the value of patents and the literature on effect of patents on R&D expenditures

The internationalization of Chinese and Indian firms: trends, motivations and strategy

The last two decades have seen significant internationalization of firms from developing economies, in terms of their greater participation in international trade, growing outflows of foreign direct investment (FDI), and a recent surge in their cross-border mergers and acquisition activity. Outward investment from developing countries is not a new phenomenon but in recent years there has been a marked increase in the magnitude of flows and a qualitative transformation in their pattern. Within this broad trend, the growing internationalization of firms from two fastgrowing developing countries, China and India, is particularly notable. Exports have been a central feature of the growth of the Chinese economy over the last three decades and, more recently, they have made a visible contribution to Indian growth too. Outward FDI from China and India has grown rapidly in recent years, and firms from these two countries are increasingly involved in overseas mergers and acquisitions

The internationalization of Chinese and Indian firms: trends, motivations and policy implications

The rapid rise in the overseas investments of Indian and Chinese firms has attracted widespread attention in recent years. To a large extent, the growing internationalization of these emerging economies has been driven by a search for resources, technology and related assets. What are the implications of this for foreign direct investment policy in both the source and the recipient countries? Furthermore, how will the ongoing global financial crisis affect the continued expansion of multinationals from the two countries, which have relied on international markets to fund their investments

Multinational Firms and the Evolution of the Indian Software Industry

The Indian software industry appears to provide a startling confirmation of the benefits of multinational investment in a fledging industrial sector. The main question explored in this paper is how and why this happened. We find that multinational firms had an important catalyzing effect on the industry's evolution, even though foreign firms established by expatriate Indians probably exerted more competitive pressure. We do not accept a popular view, which ascribes this benign influence to the development of human capital. We argue is was tight labour markets due to foreign competition, which induced domestic firms to both acquire unique organizational capabilities and to improve the value-adding strategies of multinational firms.

Capital and technology flows: changing technology-acquisition strategies in developing countries

Abstract Given the imperfections in markets for technology, foreign direct investment (FDI) has been regarded as a channel for the transfer of technologies from developed to developing countries. FDI was expected to generate technological spillovers through vertical linkages with host-country firms and through involuntary leakages. Evidence suggests that inward FDI was a weak channel for technology transfer. with only limited spillovers in developing countries. With the wave of globalization that started in the 1980s, trade in disembodied technology has boomed. Some large firms in developing countries have also acquired technology through outward foreign investment, typically through acquisitions of firms with a portfolio of technology products. Reinforcing these channels for technology acquisition by developing country firms merits active policy interventions

Local, global, and internal knowledge sourcing: The trilemma of foreign-based R&D subsidiaries

Multinational Enterprises (MNEs) develop and sell their products and services in a global market, but also have the ability to source knowledge from local, global and intra-MNE networks. We argue that sourcing knowledge from each of the three networks is contingent upon factors, such as the strategic choice made by the headquarters about the role of the research and development (R&D) subsidiary, the scientific richness of the host location, and the institutional (i.e. IPR - Intellectual Property Rights) distance between the home and host locations. Hypotheses are tested on a dataset of 89 foreign-based R&D subsidiaries of Fortune 500 MNEs. The results indicate that R&D subsidiaries with support lab mandates are less likely to use host and internal (intra-MNE) sources of knowledge and more likely to use the home location's sources of knowledge. Internationally independent labs are less likely to source knowledge from internal networks. The findings show also that the scientific capability and availability of a technically skilled workforce in the host location is associated with the R&D subsidiary's use of local, rather than internal knowledge sources. Finally, weak IPR spurs the use of local knowledge sources, suggesting a role for technological spillovers

Economic adversity and entrepreneurship-led growth lessons from the Indian Software Sector

It is commonly believed that the business environment in developing countries does not allow productive technology-based entrepreneurship to flourish. In this paper, we draw on the experience of Indian software firms where entrepreneurial growth has belied these predictions. This paper argues that the business models chosen by Indian firms were those that best aligned the country's abundant labour resources and advantages to global demand. Many potentially higher value added opportunities struggled to attain success, but the qualitative value of experimental failures and the capability gaps they exposed was invaluable for collective managerial learning in the industry. Second, the paper also shows that the presence of growth opportunities and the success of firms stimulated institutional evolution to promote entrepreneurial growth. Last we show that the distinctive aggregate contribution of entrepreneurial firms was that they outperformed business houses and multinational subsidiaries in their more productive use of available capital resources whilst achieving similar levels of growth in output and employment. This paper draws upon an earlier shorter paper co-authored with Mike Hobday and titled Overcoming Development Adversity: How Entrepreneurs Led Software Development in India

Intellectual property rights and the international transfer of climate change mitigating technologies

Our study is a quasi-replication of Dechezleprêtre et al. (2013), which was among the first studies to find a strong role for IPRs in explaining the international transfer of climate change and mitigation technologies (CCMTs). Their result is at odds with the received wisdom on the ambiguous role of IPRs in determining technology transfer to developing countries as strong IPRs can enable a market expansion effect and result in technology transfer but they may also strengthen monopoly power, increase value and reduce the incentive to transfer a large volume of technology. We extend the Dechezleprêtre et al. (2013) study by distinguishing between OECD and non-OECD groups of countries, including the effect of both de jure and de facto IPRs, and extending the period of study to include the years 2008–2018, when global trade and investment slowed down. Our exercise reveals that technology transfer to non-OECD countries is associated with a different set of policies compared to OECD countries. We also find that strong IP policies have not had the same beneficial CCMTs transfer outcomes in 2008–2018 as they did in the earlier period and in fact strong de facto IPR reduced the volume of CCMTs transfer to all countries

Policy recommendations. Aiming for effective knowledge transfer policies in high and middle income countries

This chapter shows that implementing similar policies supporting the transfer of knowledge from public research to industry in countries with different innovation systems requires different sets of complementary policies. Drawing on six case studies, which range from high- (UK, Germany, Republic of Korea) to middle-income countries (China, Brazil, South Africa), this chapter describes the process of policy convergence and why countries might differ substantially in their approach. In high-income countries with mature national innovation systems, the adoption of Bayh-Dole-inspired legislation meant that research expected to produce patents was incentivized and preferred over other types of commercialization. The policy challenge here is to ensure all channels of knowledge transfer are appropriately nurtured. In middle-income economies, where knowledge ecosystems were less mature, the Bayh-Dole legislation resulted in a process of institutional reform, such as incentives to researchers, changing the legal structure of the university incomes and the use of public research institutes. Thus, for knowledge transfer policies to be successful, it is crucial to identify the appropriate complementary measures