Research Project Global Innovation

Innovations are increasingly seen as a source of economic growth and as a useful instrument to face the competition brought about by globalization. Not surprisingly, innovations have acquired a key-role in the growth and competition strategies of many firms, as indeed of many countries and economic regions.

At the same time, a strong trend of internationalization of R&D and even globalization of innovation ("Global Innovation") may be observed across all countries actively participating in the global economy. Traditionally, there have been examples of R&D work by foreign companies in developed, industrialized economies. For instance, affiliates of foreign-owned firms spent nearly 3.5 billion euros on R&D in Germany in 1993. Latest figures (available for year 2009, released 2012) suggest that R&D expenditure by affiliates of foreign firms in Germany had increased nearly four-fold to 12.3 billion euros (27.3% of domestic R&D expenditure). Thus, about one-fourth of R&D-spend in Germany is carried out by affiliates of foreign firms. Similarly, foreign affiliates of German firms spent 11.2 billion euros on R&D abroad, which constituted approximately 27.2% of the R&D budget of domestic MNCs. While Germany's pharmaceutical industry spends 54% of its R&D budget abroad, the automotive industry spends only 18.3% of its R&D budget at overseas locations.

Relatively recently, this phenomenon has also spread to emerging countries known for their scientific capabilities. This trend is reflected in the increasing number of offshore research and development (R&D) centers located in emerging economies such as China and India and in the increasing number of patents granted to multinational firms on inventions made at such foreign locations, as a recent analysis (March 2012) by us shows. For instance, most of the DAX-30 firms in Germany that conduct in-house R&D, have R&D presence in India, as defined by the Frascati Manual. The activities are often organized in the form of an offshore captive center, an international joint venture, a third-party offshore outsourcing contract (contract R&D), or a cooperation with academic and/or research institution abroad.

Under the aegis of Research Project "Global Innovation" we seek to observe, analyze and forecast developments in the field of globalization of innovations. This project is an initiative of the Institute of Technology and Innovation Management (TIM) at Hamburg University of Technology (TUHH) and was launched in January 2007. It originally consisted of two major studies to understand the impact of Offshore R&D. In the meantime its scope has been extended to include trends like "Bottom of the Pyramid" (BOP), "Grassroot Innovations" and "Frugal Innovations". Additionally, we also monitor outward foreign direct investments (FDI) from emerging economies, especially in their technology-seeking aspects. India and Indo-German economic relations stand in a particular - though non-exclusive - focus of our studies at present.

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