Globalisation of innovation in knowledge intensive industries: lessons from the new China

The global location of R&D labs by MNCs is a rather new phenomenon; especially when it comes to establishing R&D labs in developing countries. The existing and rather limited literature on globalisation of innovation provides four possible explanations of why multinationals locate R&D labs in developing countries: reduce research costs, access large markets, tap into a large pool of qualified human resources or benefit from knowledge spillovers available in the local/regional system of innovation. The empirical research presented in this paper reveals that none of these arguments can fully explain the increasing location of R&D labs in China. The in-depth study of MNCs R&D labs in Beijing and Shanghai, China, reveals that specific aspects of market, technological and political uncertainty provide a more adequate explanation to the increasing presence of R&D labs from MNCs in developing countries such as China and thus calls for an integration in the regional innovation systems framework.