Intensified competition means that multinational enterprises (MNEs) are increasingly concerned with locating innovation activities in the most appropriate locations. This had led to emerging economies in the South becoming an important destination of R&D-related foreign direct investment (FDI), departing from their traditional role as low-cost production sites. Thus far, however, our understanding of this transformation process is limited. The purpose of this article is therefore to explore the process by which foreign MNEs’ low-value-adding operations in the South are transformed into high-value-adding R&D operations. Drawing on the current literature, we construct a framework of evolution consisting of four major waves of R&D internationalization and corresponding R&D objectives. To better understand how these waves have evolved over time, we focus on the South and trace the process of change using a single historical case study: AstraZeneca in China between 1993 and 2017. We find evidence of idiosyncratic location-bound conditions offering both opportunities and resources. The gradual development of these favourable conditions, along with AstraZeneca’s deepening local knowledge, triggered a transformation process in their operations in China. Our study thus offers important historical insights, which present a platform for future research providing more nuanced theoretical explanations of the four waves of R&D internationalization.
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We are thankful for the useful comments and suggestions given by Ram Mudambi, Emmanuella Plakoyiannaki, and participants of the Academy of International Business Conference on earlier versions of the paper. We are also grateful for the constructive comments offered by the editor and reviewers, which have helped to enhance the clarity of the arguments in our paper considerably.
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Zhao, S., Tan, H., Papanastassiou, M. et al. The internationalization of innovation towards the South: A historical case study of a global pharmaceutical corporation in China (1993–2017). Asia Pac J Manag 37, 553–585 (2020). https://doi.org/10.1007/s10490-018-9620-x
- R&D internationalization
- Emerging economies
- North and south
- Historical case study