Why is Strategic R&D (Still) Homebound in a Globalized Industry? The Case of Leading Firms in Wireless Telecom

Abstract

This paper looks at internationalization of R&D in the wireless telecommunications industry. We compare the international distribution of R&D activities that led to the development of wireless standards to other (non standard related) projects. While there is greater evidence that leading companies in this industry are sourcing globally their know how, still more strategic R&D projects remain homebound. This finding is further elaborated through conversations with R&D and IP managers at Ericsson, Motorola, Nokia, and Qualcomm. Semi-structured interviews suggested that a closer look at the internationalization of R&D investment requires scholars to consider maturation and decentralization of R&D and Intellectual Property (IP) management; uncertainties and asymmetries of information, as well as organizational “inertia” might be the reasons for sub-optimal exploitation and “appropriability” of results of foreign R&D subsidiaries. This paper brings therefore forward important questions related to the organization of R&D and inventive activity in this industry worthy of exploration in subsequent research. What interviews emphasized was the importance of IP appropriability. The need for some projects to be better synchronized with IP managers is an element that can contribute to keeping certain R&D activities more homebound than others. This alternative explanation, which relates more to the specificities of IP management and the interactions between IPR and R&D functions of firms, has not been explored yet by the literature and might require further investigation. The paper is structured as follows. The second section provides a brief conceptual discussion of major interpretations of R&D internationalization and a review of the major themes in the empirical literature. Also we consider the specificities of the wireless telecommunications industry. The third section discusses the data that we use and provides the empirical analysis based on recently collected data on essential patents notified to the ETSI (European Telecommunications Standards Institute). In the fourth section we validate our statistical analysis through interviews with managers at the four companies. The fifth section synthesizes and concludes the paper.