The rising pace of technological change in information and communications technology
(ICT) has doubtless provoked the rise of “techno-globalism” at a cross-firm level by providing
a new mode of diversification. As a result of the increasing process of technological interrelatedness,
the specialisation in a core pervasive technology (as ICT is nowadays) allows the
firm to develop tacit capabilities, which, in turn, facilitate its corporate activity in different
kinds of technology across national boundaries in an intra-firm network. Therefore ICT can
be view as a platform for entry into new products as well as an enabler of fusion of technology.
This paper investigates whether the increased specialisation in ICT has influenced the geographical
diversification or internationalisation of firms. The association between the two
phenomena is found in the later (but not in the former) period under analysis. By adopting a
more detailed level of sectoral aggregation within the ICT field, the econometric analysis
seems to indicate computing (rather than communications) as the ICT component driving the
relationship between internationalisation of research and development activity and ICT specialisation.
The 1970s’ techno-socio-economic paradigm shift has been characterised by the
emergence of technological opportunities in microelectronics technology and computerised
systems, which other technologies and related innovations depend on. Since
each paradigm shift involves technological and institutional as well as organisational
structural changes, in the 1970s the widespread application of information and communications
technology (ICT) promoted the rise of Japan as technological leader,
and the success of flexible manufacturing systems and corporate network linkages
as new forms of organisation of production (Lazonick, 1992).
Similarly, the 1970s witnessed the phenomenon of technological globalisation.
Globalisation is a concept broader than internationalisation since it goes beyond the
simple “going abroad” of the multinational corporation (MNC) by implying the
establishment and development of international, integrated intra- and inter-firm technological
networks and, accordingly, the co-ordination of geographically dispersed
research and development (R&D) activities. Therefore, globalisation of technology
can be understood as a process involving “new modes of interactions across borders
(such as foreign direct investment (FDI), inter-firm corporate agreements) as well as
the active intervention of new economic agents, such as multinational corporations”
(Svetlicˇicˇ, 1996). Despite these differences, the terms globalisation and internationalisation
will be used here synonymously with reference to the definition provided
above. Great attention has been paid to this phenomenon as a consequence of the
increasing share of technological activity located abroad by leading multinationals.
The dimensions of this process have been evaluated in a rather controversial way.
The argument of an effective impact of such a process in economic life (Cantwell
1995, 1998; Dunning, 1993; Howells & Wood, 1993; Humbert, 1995) faces the
sceptical view about the dimensions of globalisation in empirical terms (Patel, 1995;
Patel & Pavitt, 1991). It should, however, be pointed out that the sceptics seem to
criticise mainly the idea of a stateless corporation. Indeed, few firms have lost the
central role played by their home base, although they now interact with other geographically
dispersed centres.
The authors arguing for an effective international increase in the generation, transmission
and diffusion of technology explain this phenomenon as due to the technological
opportunities the current paradigm has opened up (Archibugi & Michie,
1995). The rising pace of technological change in ICT has doubtless provoked the
rise of “techno-globalism” (Archibugi & Michie, 1995) at a cross-firm level as a
result of the increasing process of technological interrelatedness. Besides the flexibility
in promoting the development of just-in-time distribution skills and consequent
geographical dispersion (Bordeau, Lock, Robly, & Straud, 1998), ICT specialisation
(in general) and computerisation (in particular) also play two major roles. First, it
can be argued that the shift into ICT has played a great role in strengthening the
globalisation of economic activity as a result of an enlargement of the corporate
spectrum of active technological fields across national boundaries through an intrafirm
network. Therefore, specialisation in these cutting-edge fields provides the firm
with a platform for entry into new products. Second, due to the pervasive character of ICT, greater specialisation in this core technology enables the firm to fuse different
types of technology, establishing new areas of interconnectedness unexplored previously.
This paper aims to test whether an increased specialisation in ICT as a new core
pervasive technology may have promoted an extension of the firm’s international
network. In other words, it investigates how the microelectronic revolution has influenced
the geographical diversification or internationalisation of firms by accelerating
the process of technological interrelatedness through the wide application of ICT as
key technology. Incidentally, it should be emphasised that it is beyond the scope of
the paper to explore specifically the link between ICT and greater flexibility in the
management of a geographically dispersed network. The reason for this lies in the
fact the two issues (i.e., the impact of ICT on a firm’s internationalisation, and the
link between ICT and flexibility in the management of a dispersed network) are
conceptually different. The former attains to the firm’s technological development,
the latter to the management of such a development.
In the following section, the theoretical framework and hypotheses are discussed.
Section 3 describes the data used. Section 4 illustrates the measures and the econometric
model adopted. Section 5 reports the empirical results, which are discussed
in Section 6. In the latter, a subsection is dedicated to explore the role of corporate
technological diversification and interrelatedness. In Section 7 a few brief conclusions
are drawn.
This paper investigates whether the increased specialisation in ICT has influenced
the geographical diversification or internationalisation of firms by considering the
globalisation process that corporate technological development and innovative
activity are experimenting with. Empirical evidence of an association between the
rising specialisation in microelectronics and the increased geographical dispersion
of R&D activity in the period 1978–86/1987–95 is found. In these years, the likelihood
of an increase in the corporate internationalisation of research activity seems
to be positively associated with a higher corporate technological specialisation in
ICT. Following Andersen (1998), the shift to a model of intergroup convergence of
technological development is identified as a possible explanation of these results.
Whilst the past technological accumulation was characterised by intragroup technological
diversification and by a structure of specialised engineering and science-based
fields, more integrated technological systems seem to emerge in the recent period.
If the historical shift towards more integrated technological systems occurred in the
1960s, it may well be that this intergroup model of technological development fully
established itself only later because of the “gestation” period of the new core technology
(e.g., ICT). Therefore, the increased specialisation in the ICT field as a whole
can be identified as a major motive for geographical dispersion of corporate R&D
from the late 1970s. Increasing technological interrelatedness and technology fusion
seem to be the core characteristics of the current technological environment. In this
context, ICT can be viewed as a connector between previously separate technologies.
As technological evolution has become increasingly interrelated and complex
(Andersen, 1998), ICT specialisation enables the firm to fuse together different kinds
of technology across national boundaries in an intra-firm network.
The incremental learning of firm-specific competencies in ICT seems to have
facilitated diversification in related sectors. These findings seem to be consistent with
Cantwell and Piscitello’s argument (1999), according to which related diversification
is achieved through an increasing geographical dispersion of firms’ technological
activity. MNCs developing technology in more than one location hold potential
opportunities for cross-border learning, enhanced by an increased take-up of ICT
technologies. ICT specialisation appears to amplify the firm’s flexibility in combining
together different kinds of technology. As these technologies are usually located in
geographically dispersed centres of expertise, firms need to adopt an international
R&D strategy. This enables the firm to benefit from technological complementarities
between related activities and between corporate learning in different institutional
environments.
The results of the regression analysis at a more disaggregated level seem to indicate
computing technology (rather than communications) as the ICT component driving
the relationship between internationalisation and ICT specialisation. The lack of convergence of computing and communications into a unique technological sector
(Duysters & Hagedoorn, 1995) confirms the distinctive character of the two technologies.
Two main factors have been identified as possible explanations of the greater
weight of computing (as opposed to communications) on internationalisation of R&
D over time. A first factor has been found in its rising pervasiveness. In fact, to
combine different technologies in order to acquire multi-technology expertise
required in producing specific products, companies should develop capabilities in
core technologies (e.g., ICT and more specifically computing). The second factor
concerns the high applicability of computing technology to product and production
processes as these technologies allow an increasing reduction in the cost of trialand-
error search.
The matching of both technological and product capabilities represents a key issue
in corporate management. Specialisation in a product without breadth of technological
expertise erodes the firm’s ability to remain in the market when technological
needs advance rapidly. Conversely, firms attempting to retain a presence in a full
range of products, which could be developed from electronics technology, may face
serious problems and eventually be forced to make choices if they do not fulfil the
requirement of broader technological specialisation. Therefore, firms should be narrow
in terms of products but broad in terms of technological capabilities (von Tunzelmann,
1998).