More companies are sending RD oversees because of intellectual capital and university collaboration.
Feb. 22, 2006--Companies that move their
research-and-development activities abroad cite intellectual capital and university collaboration, not lower costs, as their main
reason for doing so, according to a new study by the Ewing Marion Kauffman
As a result, the U.S. is losing some of its competitive advantage when it
comes to innovation, representing a potential loss of opportunity for American
entrepreneurs and scholars, the foundation said.
The study, which was released Feb. 16 by the Kansas City, Mo.-based
entrepreneurship organization, examined more than 200 multinational companies in
15 industries -- most of which were located in the U.S. and Western Europe.
U.S. corporations are not moving their R&D to India and China solely because
labor is cheaper, the study found. Kauffman officials said that the new study is
the first to provide more than anecdotal evidence on the popular belief --
generated in part by the media -- that cost is the major factor driving R&D
"There is a breaking of positive relationships between university faculty and
businesses in the U.S.,? said Lesa Mitchell, vice president of advancing
innovation at the Kauffman Foundation.
According to the study, more than half of the corporate respondents with
businesses based in the U.S. have recently expanded or are planning to locate
R&D facilities in China and India, despite concerns over IP protection.
Companies are keeping their most cutting-edge research in developed countries
where IP protection is the strongest.
Mitchell said she is concerned less about corporations moving their R&D to
Asia than the need for American universities to be open to collaborating,
teaching the best students, and retaining the best faculty.
Companies "need access to the top talent wherever they are,? Mitchell said.
"The transaction cost for collaborating outside the U.S. is cheaper.? Problematic immigration and visa services add to the loss of the smartest students and top-tier faculty each year in the
U.S., Mitchell added.
"We are educating the best and the brightest, but make it impossible for them
to stay in America and immigrate,? said Marie Thursby, professor of Strategic
Management at Georgia Tech's College of Management. Thursby conducted the study
with Jerry Thursby, chairman of the Department of Economics at Emory University.
To help combat the problem, Marie Thursby called for a "major immigration
reform that welcomes, instead of pushes out, highly skilled workers.?