MNCs' Offshore R & D Mandates and Host Countries' Locational Advantages

Abstract

Offshore R & D by multinational corporations (MNCs) has increasingly involved the developing world in East Asia, initially Taiwan and Korea but more recently China and India. However, the R & D mandates of foreign R & D facilities in this region tend not to follow the paths of evolutionary models. To explain this phenomenon, this article presents a conceptual framework, essentially based on Dunning's eclectic paradigm, with a strong flavor of the evolutionary approach to technology, but which, in some cases, also allows for leapfrogging competition. In terms of empirical work, the article also explores the relationship between MNCs' overseas R & D mandates and the locational advantage of the host country by conducting case studies on flagship MNCs' R & D facilities in the information technology sector on both sides of the Taiwan Strait. The results show some interesting contrasts across the Taiwan Strait that run counter to the evolutionary perspective. There are grounds to suggest that such contrasts have much to do with the locational advantages Taiwan and China each possess. Further implications are drawn to enrich the current understanding of R & D internationalization.