Four waves of R&D internationalization: the South as a destination of R&D related FDI

An early observation back in 2004 of (the previous incarnation of) AstraZeneca in China suggested its potential to become a strategic centre for R&D. Since then, increasing R&D FDI inflows to the South made it worthy of further research. A few years ago, we therefore felt it was time to properly investigate this fairly novel International Business phenomenon by studying the traces of AstraZeneca's historical development in China more systematically. Today, I am happy to announce our resulting paper has been accepted for publication.

  • Zhao, S.; Tan, H.; Papanastassiou, M.; Harzing, A.W. (forthcoming) The internationalization of innovation towards the South: A historical case study of a global pharmaceutical corporation in China, Asia Pacific Journal of Management, Available online... - Publisher's version

The paper's first author is my talented young Middlesex University colleague Shasha Zhao (PhD Manchester Business School). Shashas current research focuses on R&D internationalization towards the South and its impact on local development. Her work can be found on ResearchGate, Google Scholar, and www.shashazhao.com

Abstract

Intensified competition means that multinational enterprises (MNEs) are increasingly concerned with locating innovation activities in the most appropriate locations. This had led to emerging economies in the South becoming an important destination of R&D-related foreign direct investment (FDI), departing from their traditional role as low-cost production sites. Thus far, however, our understanding of this transformation process is limited. The purpose of this article is therefore to explore the process by which foreign MNEs’ low-value-adding operations in the South are transformed into high-value-adding R&D operations.

Drawing on the current literature, we construct a framework of evolution consisting of four major waves of R&D internationalization and corresponding R&D objectives. To better understand how these waves have evolved over time, we focus on the South and trace the process of change using a single historical case study: AstraZeneca in China between 1993 and 2017.  We find evidence of idiosyncratic location-bound conditions offering both opportunities and resources. The gradual development of these favourable conditions, along with AstraZeneca’s deepening local knowledge, triggered a transformation process in their operations in China. Our study thus offers important historical insights, which present a platform for future research providing more nuanced theoretical explanations of the four waves of R&D internationalization. 

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