How Reverse R&D Knowledge Transfer from Foreign Invested R&D in Emerging Markets Can Drive Global Innovation Performance

Although R&D globalization has happened in China, India and other rapid growth
regions for many years, it has to our knowledge not yet been studied how it affects reverse knowledge transfer, reverse innovation, and the innovation performance of the MNCs that are driving the R&D globalization efforts. A network based theoretical framework is introduced to analyze and explain the impact of globalization of R&D on innovation performance – mainly as a result of local connectivity. Empirically, we explore four company cases to analyze the extent to which their strategic expansion of R&D activities – from Scandinavia to China – did, or did not, contribute to increased innovation performance in terms of reverse knowledge transfer and look for explanations of innovation performance in this context. Packtech moved R&D to China and immediately arranged collaboration with three selected universities, which triggered unexpected reverse knowledge transfer with immediate impact on innovation performance in distribution equipment. By contrast, Biotech did not co-operate as closely with local universities as Packtech did. In spite of this, Biotech managed to some extent to live up to its objectives in terms of
contributions to innovation performance – partly by recruiting very senior Chinese
researchers from the US, and partly by allowing the most promising industrial PhD
students to rotate between China and the Scandinavian HQ. Robotech captured less innovation performance, when they transferred R&D to China. Their university
interaction was quite monolateral, mainly based on Robotech donating equipment for university researchers to experiment with. Like Robotech, Windtech did not engage in bilateral university collaborations. One point of differentiation from all other three case companies is that Windtech took a more open collaboration approach towards other local companies – typically R&D Centers of Western leading companies in relevant industries. This open recruiting policy provided the platform for locally created innovations with global innovation impact.