Patterns of internationalisation of corporate technology: location vs. home country advantages

Given the trends towards increasing globalisation of markets and of production, the globalisation of technology remains a subject of considerable interest to analysts and policy makers in the 1990s. This paper provides some new empirical observations for debate and discussion on the patterns of technological activities of large firms outside their home countries. It is based on a systematic analysis of the US patenting activities of 220 of the most internationalised firms in terms of their technology in the 1990s. Although firms are active outside their home countries in the `high technology' fields (such as Computers, Pharmaceuticals, Telecommunications, Image and Sound and Materials), quite a sizeable proportion of their foreign activities are concerned with process and machinery technologies. Moreover, a comparison of the technological advantage of the company at home and the advantage of the location shows that in a large majority of cases, firms tend to locate their technology abroad in their core areas where they are strong at home. These results suggest that adapting products and processes and materials to suit foreign markets and providing technical support to off-shore manufacturing plants remain major factors underlying the internationalisation of technology. They are also consistent with the notion that firms are increasingly engaging in small scale activities to monitor and scan new technological developments in centres of excellence in foreign countries within their areas of existing strength. However there is little evidence to suggest that even these most internationalised firms routinely go abroad to compensate for their weakness at home.