R&D Internationalization to China: MNEs new favourite destination

[Guest post by my Middlesex colleague and co-author Shasha Zhao. In this post Shasha shows how foreign MNEs transform low-value-adding operations in the South into high-value-adding R&D operations.]

The latest developments in international business show that emerging economies such as China have been gaining an unprecedented flow of inward R&D FDI. How has a country that, for many years, had the reputation of being the ‘global factory’ transformed to become a hotspot for MNE R&D? What was the process it went through? How did the role of MNE subsidiaries evolve from being production-oriented to R&D-focused?

In order to answer these questions in the context of China, we undertook a historical longitudinal case study of a global pharmaceutical MNE, AstraZeneca, in China between the period of 1993 and 2017. Specifically, we have focused on exploring the process by which the MNE’s low-value-adding operations in China are transformed into high-value-adding R&D operations. We constructed 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 traced the process of change using a single historical case study.

AstraZeneca in China (1993-2017): gradual local development and gradual firm transformation

Based on comprehensive and detailed historical data of AstraZeneca in China, 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. We offer important historical insights, which present a platform for future research providing more nuanced theoretical explanations of the four waves of R&D internationalization.

  • 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

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