General Background

Two hundred and fifty respondents answered some questions. Not all respondents are appropriate for all questions (see below). Of the 250, 109 (43.6 percent) gave the United States as the home country, 122 (48.8 percent) gave a country in Western Europe, and 19 (7.6 percent) gave another country as the home country.1 Throughout this report, the term “U.S. firm” refers to a respondent noting the United States as the home country and “Western European firm” refers to a respondent noting a country in Western Europe as the home country.

The respondents represent a variety of industries, with the largest industry being chemicals with 22.9 percent of the respondents. This is due, in part, to the prevalence of chemical firms in IRI and EIRMA. Not surprisingly, many respondents noted more than one industry so that there are 280 industry classifications noted by respondents. Industry classifications are given below (an “other” category was provided), and the percentage of respondents by industry is given in Figure 1. In the analysis that follows, results are not broken down by industry, in part because there are too few responses from many of the individual industries to make a detailed comparison statistically meaningful. Nonetheless, subject to data limitations, future research will address industry differences.

1

The home country was not always obvious. When there was doubt, respondents were instructed to give as their home country the country where the chief technology officer resides.



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Here or There? A Survey of Factors in Multinational R&D Location General Background Two hundred and fifty respondents answered some questions. Not all respondents are appropriate for all questions (see below). Of the 250, 109 (43.6 percent) gave the United States as the home country, 122 (48.8 percent) gave a country in Western Europe, and 19 (7.6 percent) gave another country as the home country.1 Throughout this report, the term “U.S. firm” refers to a respondent noting the United States as the home country and “Western European firm” refers to a respondent noting a country in Western Europe as the home country. The respondents represent a variety of industries, with the largest industry being chemicals with 22.9 percent of the respondents. This is due, in part, to the prevalence of chemical firms in IRI and EIRMA. Not surprisingly, many respondents noted more than one industry so that there are 280 industry classifications noted by respondents. Industry classifications are given below (an “other” category was provided), and the percentage of respondents by industry is given in Figure 1. In the analysis that follows, results are not broken down by industry, in part because there are too few responses from many of the individual industries to make a detailed comparison statistically meaningful. Nonetheless, subject to data limitations, future research will address industry differences. 1 The home country was not always obvious. When there was doubt, respondents were instructed to give as their home country the country where the chief technology officer resides.

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Here or There? A Survey of Factors in Multinational R&D Location FIGURE 1 Industry of respondents (percentage). Industrial Classifications Chemicals & advanced materials Healthcare R&D services Communications, electronics Food, tobacco, & related Industrial products not listed elsewhere Personal care; consumer products not listed elsewhere Industrial machinery & equipment Aerospace; transportation & public utilities Petroleum & related products Fabricated & primary metal Genetic engineering/molecular biology Paper & allied products Professional & related products Textile products & apparel Questions regarding the distribution of R&D effort were in terms of employment rather than expenditure. There is general consensus from our interviews with R&D managers that this minimizes error, not only from exchange rate conversion, but also from the ability to answer questions easily. Questions on employment also translate directly into policy issues of interest.

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Here or There? A Survey of Factors in Multinational R&D Location To minimize errors associated with cross-industry responses, R&D, technical staff, and production were defined early in the survey. The definitions given were For the purpose of this survey, we consider research and development, that is, R&D, to encompass the following: 1) R&D that entails new applications of science to develop new technologies, 2) R&D to improve technologies currently used by you, 3) R&D to create new products or services, and 4) R&D to improve existing products or services sold or licensed by you. Whenever we use the phrase “technical staff” we mean employees who conduct or support R&D. These include researchers, research assistants, lab technicians, and engineers involved in any of these types of R&D. Whenever we use the word production we mean either manufacturing of a good or provision of a service. Product means either a good or provision of a service. Figure 2 gives the distribution of R&D employment between the home country and elsewhere for 246 respondents. It is clear that the majority of the firms in our sample have a substantial presence outside the home coun- FIGURE 2 Fraction of R&D performed in the home country.

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Here or There? A Survey of Factors in Multinational R&D Location try; only about 15 percent conduct all their R&D in the home country and slightly more than 20 percent conduct less than half of their R&D in the home country. These are truly multinational R&D firms. Interestingly, in a comparison of U.S. versus Western European firms, it is the European firms that are more likely to have a majority of technical workers outside the home country (35 percent versus about 10 percent). Respondents were asked whether over the next three years they “anticipate that the worldwide distribution of technical staff will change substantially.” Two hundred and nine respondents answered this question, with only 37.8 percent indicating that they expected a substantial change. Ninety-seven of the respondents are U.S.-based firms, and 101 are based in Western Europe; there is not a statistically significant difference between the U.S. and Western European responses. For those who indicated that they anticipated a substantial change, there were several follow-up questions about the regions where they anticipated the largest changes: If any regions will have growth in technical employment, in which regions do you anticipate the largest growth? If any regions will have a reduction in technical employment, in which regions do you anticipate the largest reduction? Each question was followed by five choices United States Western Europe Former Soviet bloc countries China India Other Respondents could choose multiple locations in answering each question. Those who chose the “other” category were asked to indicate the country/ region. Figure 3 gives the number of countries/regions identified. Fifteen respondents plan to increase technical employment in the United States over the next three years, whereas 23 firms anticipate a decrease. Two of the 15 anticipating an increase in U.S. technical employment and 15 of the 23 anticipating a decrease in U.S. technical employment are U.S. firms. To put this in perspective, recall that 209 firms answered this question. Thus, 7.2 percent of the respondents expect an increase in technical employment in the United States, whereas 11 percent

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Here or There? A Survey of Factors in Multinational R&D Location FIGURE 3 Regions/countries where a change is R&D employment is anticipated. anticipate a decrease in the United States. In contrast, only 3.3 percent (7) firms anticipate an increase in technical employment in Western Europe, whereas 16.7 percent (35) anticipate a decrease. China and India are the main targets for expansion. The “other” category is largely composed of respondents who indicated that the target region would be in Asia.

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