Global Flows and Barriers

Trends in International Technological Cooperation

GERALD P.DINNEEN

GLOBAL TECHNOLOGY has had a tremendous impact on the structure of industry. As technological advances occur ever more rapidly and in many parts of the world, industry has responded by forming joint ventures, alliances, and overseas research and development (R&D) organizations. In turn, these new organizations expedite the globalization of technological innovation. This interaction will continue.

Moreover, industries have had to work in the global marketplace to get a proper return on investment for ever more expensive technological developments. They have formed international marketing organizations. In addition, industries have gone to worldwide production, both to reap the benefits of lower production costs and to lessen trade tensions in countries where imports have had a significant impact on domestic industries. There has also been transfer of technology through licensing, joint ventures, and the creation of new business entities. These have increased the number of subsidiaries of the multinational corporations and have created new strategic alliances.

This has been made possible by a number of communications technologies, such as fiber optics, electronic mail, and particularly satellite communications, a truly revolutionary innovation providing communications worldwide, including developing countries.

This trend toward the formation of joint ventures and international teams for major projects will continue. In fact, one change for the global economy is increased cooperation earlier in the development cycle in industrial research

These papers are adapted from the transcripts of the Sixth Convocation of the Council of Academies of Engineering and Technological Sciences.



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Globalization of Technology: International Perspectives Global Flows and Barriers Trends in International Technological Cooperation GERALD P.DINNEEN GLOBAL TECHNOLOGY has had a tremendous impact on the structure of industry. As technological advances occur ever more rapidly and in many parts of the world, industry has responded by forming joint ventures, alliances, and overseas research and development (R&D) organizations. In turn, these new organizations expedite the globalization of technological innovation. This interaction will continue. Moreover, industries have had to work in the global marketplace to get a proper return on investment for ever more expensive technological developments. They have formed international marketing organizations. In addition, industries have gone to worldwide production, both to reap the benefits of lower production costs and to lessen trade tensions in countries where imports have had a significant impact on domestic industries. There has also been transfer of technology through licensing, joint ventures, and the creation of new business entities. These have increased the number of subsidiaries of the multinational corporations and have created new strategic alliances. This has been made possible by a number of communications technologies, such as fiber optics, electronic mail, and particularly satellite communications, a truly revolutionary innovation providing communications worldwide, including developing countries. This trend toward the formation of joint ventures and international teams for major projects will continue. In fact, one change for the global economy is increased cooperation earlier in the development cycle in industrial research These papers are adapted from the transcripts of the Sixth Convocation of the Council of Academies of Engineering and Technological Sciences.

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Globalization of Technology: International Perspectives and development. Cooperation is already prevalent in academia, but not in industry, except for joint ventures. In the past, industry has not favored cooperative research and development because of concern about antitrust violations and loss of proprietary advantage. Obviously, neither of these considerations has inhibited cooperative research and development at universities. Since the easing of antitrust regulations for cooperative precommercial research and development and the pressures on industry due to increased worldwide competition, there are indications of a movement toward joint technology efforts. In the United States, there is a Microelectronics and Computer Technology Corporation (MCC) made up of about 20 companies that are cooperating in the precommercial development of technology. Examples in Europe include the European Strategic Program for Research and Development in Information Technology (ESPRIT), the Alvey Directorate and associated activities in Great Britain, and certain projects of the European Economic Community (EEC). In Japan, there is the fifth-generation computer project and other activities sponsored by the Ministry of International Trade and Industry (MITI). Although it is still early, certain examples show promise that these consortia and collaborations will yield good research and development results. The true test of the success of these joint activities is whether or not research and development will find application in the companies that are supporting it. Will it be possible to transfer technology from these joint activities back to the companies? Although there are encouraging signs, that answer is still an unknown. One major impetus for cooperative activity is that it is becoming increasingly difficult for companies to hold on to their competitive edge. This difficulty is due to the rapid diffusion of technology; the obsolescence of existing facilities and the high capital costs of new facilities, particularly in microelectronics and some of the new fields; the complexity of scientific and technological endeavors that are too big for any one company; economies of scale; and the discontinuity between R&D and commercialization of research results. These problems could be mitigated through increased collaboration, but there are barriers to cooperative efforts. The most serious of these is the cultural barrier, or the difficulty that engineers and scientists have in accepting technology from an external source, let alone another nation. This “notinvented-here” syndrome is a strong phenomenon in the United States. It appears to be less strong in Japan, for Japan has been extremely successful in transferring U.S. technology and applying it to new products. Protectionism is a barrier not only when it is instituted by government but also when it exists between companies. The latter is due to a company’s desire to retain proprietary advantage. However, with the rapid diffusion of

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Globalization of Technology: International Perspectives technology, it is becoming more and more difficult to maintain proprietary advantage. The desire to preserve domestic employment and to maintain domestic production for reasons of national security are important barriers to international technological cooperation. Another large barrier is the need for standards, open communication, and better protocols for transmission of data between computers and other electronic devices. Even within any one country such as the United States, where large computer companies and small semiconductor companies may have different objectives and backgrounds, the gap between the various participants in a technical field constitutes a barrier to cooperation. The problem is aggravated one hundredfold when there is collaboration between nations. Differences in economic strength, culture, and work force must all be overcome. One way to overcome these barriers is to establish truly international laboratories. One such facility is IBM’s laboratory in Zurich. Although Honeywell’s corporate research laboratories, which employ 450 people, are not international in the same sense, 42 percent of the new scientists and engineers hired in the last 2 years are foreign nationals. This high proportion of new hires who are foreign nationals is not unusual when one considers that 55 percent of the U.S. graduate students in engineering are foreign nationals. This is the beginning of another kind of international cooperation. Whichever form international cooperation takes, it will provide for a free flow of technology, which will in turn create more technological innovation to fuel the global economy. Technological Cooperation in Europe HARRY L.BECKERS WHEN INDUSTRIALISTS AND ACADEMICS get together to talk about science and technology, they often need to spend some time sorting out their respective definitions of those terms. There are many differences between industrial R&D and university R&D. The objective of university R&D is to deliver the very good engineers needed in industry and government. Evaluation of the quality of university R&D is frequently accomplished through the peer review of articles that result from these endeavors and that are published in the open literature. Support for university research is determined by a worldwide equilibrium between the availability of government funding and the needs of academic research establishments. When research estab-

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Globalization of Technology: International Perspectives lishments in a particular country think that they are not getting enough money from the government, they exert pressure in appropriate places by comparing themselves with other countries. If the politicians think the academic institutions are getting too much, they always manage to cut back the budgets for university R&D. R&D in industry, on the other hand, is judged by the bottom line. If the research results are translated into products that make a profit for the company, that research effort is considered worthwhile. In general, research in industry is done for competitive reasons. Rather than publishing the results in the open literature, industry uses patents and licenses as a system for the transfer of technology worldwide. Technology can be sold, or it can be used to the originator company’s advantage. In other words, the system in industry is different from that in academia. At learned societies one of the questions is always how many articles, rather than how many patents, have you produced? It is important to make this distinction between academic and industrial research when talking about cooperation, technology transfer, and government subsidies. One impetus for increased technological cooperation in Europe is competitive pressure from the United States and Japan. In the United States a great deal of money is spent on industrial research. In addition, defense spending subsidizes much U.S. R&D. At one time, 60 percent of the R&D budget at the General Electric Company was paid for through defense contracts. Although such support for R&D is all done on a commercial and contractual basis, this definitely gives a company an advantage in the resources it has available. Japan is moving toward having more basic research conducted by universities. In fact, four or five universities have arranged to conduct research in the laboratories of Toshiba, Matsushita, and other large companies. This is a clever way of introducing basic research in a country and making sure that the results are used by industry. In response to these activities in the United States and Japan, the EEC Commission in Brussels is attempting to organize Europe for collective efforts in R&D. Currently, a “common market” does not exist, nor do people from one country always know what the people in other countries are doing. Some EEC programs are attempting to reduce this technological isolation by bringing together researchers from different countries, for example, from a French university and a company in the Federal Republic of Germany, or a British company and a laboratory in the Netherlands. The amount of money involved is relatively small, but it has a tremendous impact on the relationships within Europe. A committee to provide advice to the EEC programs is the Industrial Research and Development Advisory Committee (IRDAC), consisting of members from European industries with widely differing backgrounds. IRDAC

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Globalization of Technology: International Perspectives was set up as an independent committee in 1985 by then EEC Commissioner Vicomte D’Avignon, in an attempt to ensure that European R&D programs would have an adequate industrial orientation. Through working parties, IRDAC has involved a wide spectrum of industrial experts, thus ensuring that a balanced view of European industry forms the basis of IRDAC’s advice to the Commission. IRDAC replaced an earlier advisory committee made up of member-state representatives, because it was felt that the advisory role of the committee was hampered by political considerations. Five or 10 years ago the governments were spending considerable sums of money on the sunset industries, and now, they are putting much of their money into high-tech, or sunrise, industries. In the EEC R&D program, there is also a project called BRITE, Basic Research in Industrial Technologies in Europe, which is aimed primarily at the sunshine industries, which are perhaps less high-tech but are still earning money. Through this endeavor, industry from one country works with a university in another country. IRDAC closely monitors this program and has established several working parties consisting of industrial experts to provide advice on relevant activities in, for example, the materials and mechatronics fields. Although EEC funding levels may be lowered, funding of national R&D programs in some EEC member countries has increased. This has created a paradox in Europe as individual countries strive to increase funding for their national R&D programs at a time when they are trying to reduce the funding for EEC programs, which frequently address the same areas of technology. Europe’s nationalistic tendencies have resulted in inefficient use of R&D funds. Countries claim to have a unique program designed to increase the competitiveness of a particular industry, while a neighboring country has exactly the same program for the same industry. A second problem is that small European companies need to be “Europeanized.” Europe still has a long way to go, but it may help put the situation in perspective to remember that just over 40 years ago we were still at war with each other.