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IBM and Du Pont; Eastman Kodak, Hewlett-Packard, and Upjohn: just a few of tile U.S. corporations famous for being on the cutting edge of scientific research. And although each of these companies has long operated across international boundaries, this research has traditionally been conducted within the U.S. Increasingly, however, that is changing. In the past five years, all of these industry leaders have opened research facilities in Europe or Japan— regarding a new era of truly multinational industrial research. And these firms aren’t alone. The National Science Foundation reports that U.S. corporations as a group are spending an increasing amount of money on overseas research. In 1985, according to NSF figures, U.S. firms spent $3.7 billion on R&D abroad, versus $5 1.4 billion at home. By the end of 1986, overseas research had grown some 27%, to $4.7 billion, while domestic research was up just 6.5%, to $52.8 billion. And tentative statistics for 1987 show that R&D spending in the U.S. rose just 3.4%, to $54.6 billion, while the investment in overseas facilities climbed by 6.4%, to $5 billion. The motive behind this scramble to foreign shores is clear: to tap technologies and scientific talent being developed faster—or better—in other countries. NSF deputy director John H. Moore stresses that the existence of such expeitise is a reality that cannot be denied. “The post-World War II era, when it was just automatically assumed that the U.S. led the world in everything, is over,” he says. “We need to wake up to the fact that there’s a lot of good work going on here in the world. And we need to appreciate that fact and take advantage of it." But what are the ramifications for industrial science within the U.S.? Contrary to what one might think, this trend does not appear to bode ill for corporate projects within our own country. As the NSF figures indicate, there has been no concomitant drop in industrial investment in research within the U.S., nor in the number or variety of jobs or trining opportunities for scientists. The trend does not represent an either/or situation, explain both industry executives and analysts, but merely a recognition of a new and valuable resource. Moreover, greater interaction with foreign colleagues—who will now be on the same “team”—is something that the individual scientist can take advantage of, as well (see accompanying story). Such was the reasoning at Eastman Kodak Co. in August 1984, when Howell Hammond arrived in Japan as the firm’s new vice president and director of R&D for Japan- ese operations. Until this time, Kodak Japan sold products through two distributors but had no real corporate presence in the country. But. Japan represented Kodak’s second largest market and was at the same time home to increasing competition and surging technology in fields such as semiconductors and microelectronics. Given this environment, “we decided that we could not really afford to be absent from Japan [research],” says Hammond. After extensive strategy sessions, for which Hammond commuted between Japan and corporate headquarters in Rochester, N.Y. the company decided that the best way to access the new Japanese teehnologies was to establish its own R&D facility in the country. Besides an assertive move in microelectronics the plan called for a foray into the pharmaceutical and medical arenas, areas in which Kodak has an interest and Japan also is a growing player. By April 1986, a research site was chosen, and groundbreaking for the new facility took place in July 1987. Last October, Hammond’s group moved into a spanking-new, $74 million research building in Kohoku New Town, part of greater Yokohama. But the most advanced research facility is useless without a staff. So as the land and construction strategy unfolded, relationships were struck up with key university researchers. Kodak also instituted a fellowship program for Japanese university students and conducteda series of oncampus lectures to let people know about the company and its technology. Then the recruiting began. Advertisements were taken out in technical publications, students were invited for orientation and interviews, and senior managers were recruited away from university, industry, and government labs. Today, the Eastman Kodak (Japan) Research Development Lab is home to 100 employees—80 of whom are engineers. Only two of them are from the U.S. Hammond explains that many companies enter Japan to compete for the sizable market. But Kodak decided to compete for technology, as well. “That competition is just as important for the long-term future of our company, because Japan is producing more and more of the technology,” he says. Such thinking isn’t isolated. Near the Kodak facility, for instance, is a similar R&D plant built by Du Pont. Last year Upjohn opened a $100 million pharmaceutical research center in Japan, called Tsukuba Research Laboratories, which will be its largest research facility outside company headquarters in Kalamazoo, Mich. And IBM now has two of its four basic research centers overseas. Hewlett-Packard is another leading firm to see the international writing on the wall. While the company has long had overseas operations, it wasn’t until four years ago, when its Integrated Systems Center opened in England, that H-P began long-range research outside its Palo Alto, Calif., headquarters. As the European Economic Community prepares to consolidate in 1992, the center focuses mainly on information management and networks and communications. Frank Carrubba, director of Hewlett-Packard Laboratories, explains that U.S. government investment in university R&D has decreased dramatically in the past 20 years. As a result, he argues, “there is not as much incentive for researchers from other nations to come and work here in our industry and university research institutions.” Moving overseas and employing foreign scientists only helps U.S. science—by bringing in new ideas, new expertise, and new approaches to problems. If you ignore this overseas expertise, he adds, “then you start getting an instability in a research environment that could create gaps in the flow of technology—and these gaps could be the interruptions of invention and intellectual property that are necessary to maintain the competitiveness of the nation.” Many corporations are sampling the foreign research pie via another. strategy: by entering into strategic liaisons with overseas finns, buying a percentage of foreign companies, or acquiring them outright. One of the most popular moves is to establish formalized links with major research. Each company calls them something different—research centers, discovery centers, science centers—but the basic idea is the same: to fund university research in exchange for marketing rights to new technologies. But tapping foreign talent is just part of the puzzle. It is also important to be closer to major business segments. Together, Europe and Japan represent a market about as large as the U.S. Says Ralph thristoffersen, vice president for discovery research at Upjohn, “Any company that wishes to take advantage of the entire market has to think about the global aspects.” Indeed, to a large extent, the globalization of R&D can be viewed as a logical extension of internationalism in general. In the past 10 or 15 years, a number of factors—increased global competition, more homogeneous products, more tightly linked financial markets, and better communications, for instance—have all combined to encourage multinational business. Firms typically begin by establishing marketing centers overseas, then move into manufacturing says Arthur L. Chait, director of worldwide technology management and strategy practice for SRI International in Palo Alto, Calif. Because it is the easiest to keep at home, says Chait, “R&D usually comes later in this evolution.” A vital component in this overall equation is the concept of “corporate citizenship,” the idea that a company must become an established, integral part of a foreign community in order to be accepted. “You have to be as much an accepted corporate member of those communities as the industries that have grown up there,” explains Hewlett-Packard’s Carrubba. Increasingly, research and development is part of this. “The perception is that you aren’t really a European company unless you have R&D in Europe," notes George .H. Siegel, vice president for technology for Allied Signal International. This idea is at least as important in Japan, home. to what Upjohn’s Christoffersen terms “thought leaders.” These are physicists and other scientists with broad influence—in scientific and political thinking, as well as in public perception. If they don’t feel a company is committed to its Japan market, he says, it can spell doom. So in order to take advantage of developing technologies and talents around the world—as well as preserve a stake in the international market—these U.S. corporations are taking their R&D operations across international borders. Scientists seeking to make a mark in the corporate world may start finding it necessary to consult travel agents more often, or to brush up on their German or Japanese. But far from representing a threat to domestic R&D efforts, at least 33 companies are doing research on the technology. the trend is a natural development for companies with a yen to become truly multinational in scope. Robert Buderi is a freelance writer based in San Francisco.

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