Strategic Perspectives on the Globalization of Technology - PowerPoint PPT Presentation

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Strategic Perspectives on the Globalization of Technology

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  1. Strategic Perspectives on the Globalization of Technology Dr. Denis Fred Simon Provost Levin Graduate Institute State University of New York Nanjing, China May 28, 2005

  2. Microcosm: The Quantum Revolution in Economics & Technology (Gilder) “….in the past, wealth and power came mainly to the possessor of material things or to the ruler of military forces capable of conquering the physical means of production—land, labor and capital. Today, the ascendant nations & corporations are masters not of land and material resources, but of ideas and technologies.”

  3. International Technology Issues: New Perspectives and Issues • More general awareness of role of technology in economic progress and competitiveness: NII in the US • Revolution in communications and transportation • Liberalization of trading policies across the globe via WTO…more foreign investment vs. trade • Closer integration of product and capital markets • Expansion of MNCs …including China and India • Emergence of four dragons in Asia…Taiwan, Korea, Singapore and HK….+ fifth dragon…China • Intensification of international competition…search for new markets, talent, and new ways to win: markets in China, engineers in India, under-utilized know-how in Russia, etc.

  4. Globalization of Technology • New centers of technological capability outside US, Japan and Western Europe • Process of technological exploration and exploitation has become trans-border/transnational • More rapid movement of technology overseas at earlier point in life cycles • Shift away from unilateral (one-way flow) of technology to bilateral (two-way) flows • Ugrading of technology advance to a national priority, esp. as new high tech industries become more critical • More extensive “people” movement, esp. in S&T fields: formation of a truly “global talent pool”

  5. Role of Technology in World of Globalization • Shift from variable-cost to fixed cost competition: process and product + service differentiation count in the end as much as (if not more than) costs • New success element: harnessing and managing transborder innovation—new core competency • Competitive firms are those that perform well across three dimensions • Ability to link and leverage knowledge, information, and people expertise across borders • Ability to shift to integrated systems of operation and management...software is critical as the “glue” • Ability to be a technology leader: establishing the rules and standards of the game

  6. Technology & the Borderless World “We are finally living in a world where money, securities, services, options, futures, information, and patents, software, and hardware, companies and know-how, assets and memberships, paintings and brands are all traded without national sentiments across traditional borders.” Kenichi Ohmae former head-McKinsey Japan

  7. Trends of Global Movement of Technology • More rapid movement of technology overseas as a result of shorter product life cycles and the demands of international competition: win through technology • Increased focus on foreign markets for securing profits • More small and medium businesses involved in international business, esp. those with high-tech focus • Growing flow of technology into USA • Greater emphasis on forging strategic alliances • More government involvement as buyer, supplier, and facilitator • Outsourcing..the recent trend..plugging into foreign high tech assets—cost, talent, market driven

  8. Factors Associated with Shorter Product Life Cycle • Acceleration of pace of tech development • Less time between recognition of feasibility and commercialization • Disengage production from PLC • Convergence of international markets and cost factors • Standardization of capital costs • Shift from labor-savings to materials-reducing technology • Changes in international communications and transportation • FDI decision no longer just a response to threat to export markets • Specific product, technology and IPR strategies • Integrated approach to global licensing • More environmental scanning: strategic location identification

  9. Shortened Product Life Cycles

  10. R&D Units Follow Japanese Firms to East Asia Economies • Japanese companies shifting FDI away from reliance on labor-using factories, warehouses & sales outlets • Increased emphasis on local R, D&E facilities to respond more quickly to market shifts: local/overseas • Thailand, Philippines, Vietnam and Indonesia have become sites for more traditional Japanese FDI • Matsushita Institute of Technology in Taiwan • Design work for new product development for Asian markets • Matsushita TV and a/c R&D units in Malaysia coordinating and integrated…but now moving to China • China is now the new playing ground for Japanese electronics industry, including establishing R, D&E bases

  11. Emergence of China: Next Techno-Superpower? • China has emerged as a major player in global technology affairs much more quickly than most would have predicted • Chinese economy has been beneficiary of globalization: greater and easier access to newer technologies than any developing nation in last half of 20th century • China has huge domestic market it can leverage for acquiring technology: not 1.3 billion , 250-300 m buyers • Strong commitment to national technology base: govt investment in national airplane, semiconductor industry, nanotechnology and biotechnology • Major site for MNC R&D investment: China no longer simply “factory to the world” • Setting new global technical standards: sizeleverage

  12. International R&D Patterns and Agglomeration Dynamics • Agglomeration dynamics led to greater concentration of R&D in postwar period…until late 1990s • Internationalization has led to a greater dispersion of R&D activities, and steadily, albeit gradually, a shift in the sources of technological innovation • Globalization and regionalization have led to a redefinition and reformation of existing technological networks • GE R&DNIsakayuna(NY) + Shanghai +Bangalore+Munich+St. Petersburg • Agglomeration patterns have begin to shift in general but are stronger in some industries (autos/electronics) than others (food stuffs) • Technology attracts technology

  13. Impediments to Globalization • Regionalization may be a possible impediment to globalization, e.g. European Union or even APEC in Asia • Techno-nationalism is growing in some cases • Shift away from comparative advantage (Adam Smith) to creating competitive advantage at national level: targeting • Increased pro-active role of government in regulatory areas, e.g. environment, standards, etc. • Corporate conservatism—both in terms of internal culture and organizational structure….the technology is there..but not necessarily the will • Home country socio-political issues: transfer of jobs • Boeing engineers and tech transfer to China: ITA case brought to Commerce Dept • More China bashing on the way—IPR issues

  14. The IPR Issue: Current Dilemmas • Most important assets possessed by successful companies are intangible, primarily represented by intellectual property: codified as well as trade secrets or proprietary know-how • Proprietary know-how produces economic advantage by creating barriers to competition from others • Today, IPR control lies at heart of competitive marketplace: drives the investment in R&D, e.g. pharma, and creates an incentives for release of info re: royalties • Software (rather than hardware) is the battleground, with piracy problems estimated to be in tens of US$ billions • Bilateral/multilateral agreements only solve ½ problem • Must create compliance incentives or rewards: share in the benefits through collaborative exploitation

  15. Where are we headed? • Information technology revolution has led to more emphasis on coordination vs. control across corporate world: global playing field • Companies are less homogenous as the traditional wire diagram has given way to more varied, complex, and multi-faceted types of cooperation, alliances, joint ventures, etc. • Outsourcing revolution is just the beginning—driven not simply by cost differentials but by productivity increases at home • Next battleground is over global standards: RFID, wireless, cellular tech • Impact of 9/11 and H1B visa situation has sparked reverse brain drain..fewer foreign scientists and engineers staying in US.. • US no longer lone ranger as source of innovation..global technological leveling is occurring • There is a new game…a truly global game….and it is here to stay..we must adapt, adjust, and reorient our thinking…invest in education …key is already access to high end talent