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
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.”
International Technology Issues:
New Perspectives and Issues
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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.
Globalization of Technology
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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”
Role of Technology in World of
Globalization
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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
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
Trends of Global Movement of
Technology
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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
Factors Associated with Shorter
Product Life Cycle
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Acceleration of pace of tech development
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Less time between recognition of feasibility and commercialization
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Disengage production from PLC
Convergence of international markets and cost factors
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Standardization of capital costs
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Shift from labor-savings to materials-reducing technology
Changes in international communications and transportation
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FDI decision no longer just a response to threat to export markets
Specific product, technology and IPR strategies
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Integrated approach to global licensing
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More environmental scanning: strategic location identification
Shortened Product Life Cycles
FIRM
PRODUCT
TIME CHANGE
General Motors New Buick
60 to 30 mnths
HP
Printer
52 to 9-12 mnths
IBM
PC Computer
48 to 4-6 mnths
Honeywell
Thermostat
48 to 12 mnths
Ingersoll
Air Grinder
42 to 12 mnths
Warner
Lambert
Sony
Clutch Brake
36 to 10 mnths
CD Player
24 to 3-4 mnths
R&D Units Follow Japanese Firms to
East Asia Economies
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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
Emergence of China: Next TechnoSuperpower?
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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
International R&D Patterns and
Agglomeration Dynamics
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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
Impediments to Globalization
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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
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Boeing engineers and tech transfer to China: ITA case
brought to Commerce Dept
More China bashing on the way—IPR issues
The IPR Issue: Current Dilemmas
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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
Where are we headed?
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Information technology revolution has led to more emphasis on
coordination vs. control across corporate world: global playing field
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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.
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Outsourcing revolution is just the beginning—driven not simply by cost
differentials but by productivity increases at home
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Next battleground is over global standards: RFID, wireless, cellular tech
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Impact of 9/11 and H1B visa situation has sparked reverse brain
drain..fewer foreign scientists and engineers staying in US..
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US no longer lone ranger as source of innovation..global technological
leveling is occurring
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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