Study: University quality key to saving cutting-edge corporate R&D from offshoring

December 07, 2006

Although corporate research and development operations are increasingly moving to emerging countries like India and China, companies continue to keep the majority of their cutting-edge research and development (R&D) in developed nations, according to a new study published in the December 8 issue of the journal Science.

To maintain this competitive advantage in the new science arena, developed countries must have government and educational policies that preserve the excellence and accessibility of their research universities, note researchers Marie Thursby, a professor of strategic management at Georgia Tech College of Management; and Jerry Thursby, a professor of economics at Emory University. That's because high-tech companies frequently seek collaborative relationships with research universities.

The researchers surveyed 249 R&D-intensive companies headquartered in the United States and Western Europe, finding that 49.6 percent of the R&D effort in developed nations is for new science while the proportion in emerging countries is 22 percent. The researchers distinguish "new science" R&D from the application of "familiar" sciences already in use by a company and/or its competitors.

"The new science at sites identified by our respondents is largely conducted in developed countries, and this is significantly related to university factors," write the Thursbys in the article, titled "Where is the New Science in Corporate R&D"" They note that the most striking result of their survey was finding that the type of science conducted at a particular location is most influenced by the ease of collaboration with nearby universities and the presence of faculty with special expertise. Survey respondents perceived universities in developed economies to have the greatest collaborative strengths.

Respondents also indicated that they expect their overall R&D to grow in emerging countries and decline in developed economies. While conventional wisdom suggests that lower cost would be the chief consideration driving this trend, the Thursbys' research shows that often more important factors include the quality of R&D personnel available and market issues, in addition to opportunities for university collaboration.

When it comes to new science, the edge held by developed countries could dull, warn the researchers. "Although respondents claim it is easier to collaborate with universities in developed countries, there is mounting evidence of changing corporate sentiment," write the Thursbys, citing corporate frustration at the increasing aggressiveness of U.S. and European universities when negotiating business/university research agreements. "This dynamic will only be accentuated as the quality of universities in emerging economies improves," the researchers add.
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For more information, contact Marie Thursby at 404-894-6249 or marie.thursby@mgt.gatech.edu, or Jerry Thursby at 404-712-868 or jthursb@emory.edu.

Georgia Institute of Technology

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