labels: industry - general, economy - general
Intellectual capital, not costs determine R&D offshoring: Study news
18 February 2006

Despite the trend toward off-shoring R&D operations to Asia, most companies in the US and Europe prefer keeping their most cutting-edge research within developed countries where intellectual property (IP) protection is the strongest.

This is revealed in a new survey, sponsored by the Ewing Marion Kauffman Foundation, among over 200 multinational companies across 15 industries in the US and Western Europe and conducted by Marie Thursby, professor of strategic management at Georgia Tech College of Management, and Jerry Thursby, chairman of the department of economics, Emory University

Contrary to popular belief, lower cost is not the most important determining factor driving companies to locate their R&D operations in foreign countries such as India, but intellectual capital and university collaboration.

Despite the costs being higher in the US and other developed countries only 22 per cent of the R&D effort migrated to developing countries is for new science because of the high calibre of scientists in Europe and the US — a comparative advantage that the western world enjoys.

However, India and China will continue to be major beneficiaries of research and development expansion over the next few years as companies seek new market opportunities and access to top scientific and engineering talent..

More than half of the corporate respondents from the US say that they have already or will locate R&D facilities in China and India instead of other developed countries.

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Intellectual capital, not costs determine R&D offshoring: Study