The Impact Of MNEs' R&D Activities On China's NIS

Since the 1990s multinational enterprises (MNEs) have increasingly invested in China and established R&D units to perform adaptive innovations for the local market. Accompanied by the expansion of firm and market, foreign-affiliate R&D centres are becoming important and doing more innovative R&D. China's entry into the World Trade Organization(WTO)has brought about a boom in the inflow of R&D investment as well. At the present time, China has become the third global destination for foreign R&D efforts and the new R&D centre in Asia. Not only foreign-affiliate R&D centres engage in R&D activities, but they also work with local firms, universities and research institutions to conduct R&D alliances and cooperation. In general, MNEs'R&D activities have had a significant impact on technology development and application, management and institutional environment in China. At the same time, China's national innovation system (NIS) is in a transitional stage and prepared to actively integrate into the economic globalization. In this context, the study on the impact of MNEs'R&D activities on China's NIS is theoretically and practically important.The dissertation contains 7 chapters.The first chapter is Introduction. In this chapter, research background and theoretical and practical significance are elaborated, the concepts of R&D and NIS are defined, related literature is reviewed, the research path and structure arrangement are clarified, and the innovation and shortcomings are given.The second chapter is theoretical basis. The MNEs'R&D units are regarded as the parts of national innovation systems of the host countries. Firstly, the structure of NIS is analyzed. It includes innovational organizations,institutional environment and the interactions between them. Secondly, the evolution mechanism of NIS is studied, which is based on the evolutionary economics, institutional economics, supply and demand theory and self-organization theory. Thirdly, the interactions between MNEs'R&D units and NIS are deeply analyzed, namely the R&D alliance with local firms, the cooperation with local universities and research institutions, the linkage with local firms, the clusters in local technology park and the mobility of skilled personnel. Fourthly, the relation between MNEs'R&D activities and the evolution of NIS is studied. The R&D activities of MNEs might break the balance of NIS, provide the impetus to innovation and promote the transformation of NIS.The third chapter is the global strategy of MNEs'R&D investment. This chapter introduces the process of globalization of R&D and its current features, analyses the motivations and locations of R&D investment, and studies the MNEs'investment strategies. The globalization of MNEs'R&D has experienced start-up stage, growth stage, and development stage. Its current features are: the globalization of R&D is slowing down; MNEs are expanding R&D to developing countries; the type of R&D is beyond adaptive innovation. The motives for globalizing R&D can be summarized into six categories: production-supporting, market-driven, source-seeking, technology-tapping, strategy-driven and policy-driven. The factors from both MNEs and host countries determine the locations of overseas R&D activities. Affected by the firm size, the degree of internationalization and the characters of industry, the locations, industries and motivations of overseas R&D by MNEs vary greatly between the US, Japan the Europe. The analysis of their MNEs contributes to a comprehensive understanding of the nature of globalization.The fourth chapter is case study. This chapter studies the impact of MNE's R&D activities on host country's NIS. Since the 1960s, Korea and Singapore have achieved impressive economic growth and transformed into newly industrialized countries in the space of only four decades. Their success attribute to technology transfer from MNEs. At present, the two countries have been the main destinations of MNEs'R&D investment in Asia. Korea has been trying to develop its own technological capability, while Singapore has relied on foreign investment excessively. Some lessons might be drawn from their experiences for other developing countries. In order to narrow the technology gap and catch up, developing countries may import technology and enhance technological capability. However, both of them should be emphasized. The following four suggestions are made: firstly, to improve institutional environment; secondly, to enhance technological capability; thirdly, not to rely on foreign investment excessively; fourthly, to make appropriate policies.The fifth chapter is the evolution of China's NIS. From 1911 to now, China's NIS has experienced germination stage, growth stage, reconstructing stage and transforming stage. At present, China is still in transition. This chapter uses the method of historical analysis to examine the background, innovational organizations, institutional environment, interactions, system innovation and shortcomings of each period. On this basis, the characteristics of the evolution of China's NIS have been summed up: firstly, the R&D investment has been insufficient; secondly, the capability of basic research has been poor; thirdly, the system of tertiary education has lagged; fourthly, the innovational role of firm has been weak; fifthly, the institutional environment has to be improved.The sixth chapter is the impact of MNEs'R&D activities on China's NIS. Since the 1990s, the R&D investment of MNEs has experienced set-up stage, growth stage and development stage in China. The motives and locations of MNEs'R&D investment are similar to those of globalization. As MNEs are expanding their R&D units and increasing creative R&D activities in China, the strategies of R&D units are upgrading as well. The interactions between MNEs'R&D units and China's NIS are the R&D alliance with local firms, the cooperation with local universities and research institutions, the linkage with local firms, the clusters in local technology park and the mobility of skilled personnel. Not only have the R&D activities of MNEs acted as a supplement to local R&D investment and promoted the import and export of high-tech products, but they also have pushed local firms and research institutions to learn by doing. In general, the R&D activities of MNEs have broken the balance and closeness of China's NIS, strengthened the impetus to innovation and might promote the evolution of China's NIS. However, the impact of MNEs'R&D activities is determined by the innovative capability of the host country. At the present time, China's innovative capability is still low. Firstly, the learning ability of enterprises needs to be enhanced. Secondly, the Competition in local market is a little low. Thirdly, the input and output of manpower is low. Fourthly, the function of innovation system is inefficient. Therefore, China can catch up and achieve economic take off through independent innovation.The seventh chapter is conclusion and suggestions. Based on the main conclusion of the dissertation, the following policy recommendations could be outlines. Firstly, the role of enterprise should be strengthened. Secondly, basic research should be enhanced. Thirdly, both the quantity and quality of manpower should be emphasized. Fourthly, policy learning should be improved. Fifthly, the institutional environment should be developed.