Competitiveness through R&D internationalization : patent- and interview data based studies on a latecomer in the telecommunications industry

Abstract

In recent years, we have been observing an increase in knowledge-intensive activities from emerging market latecomer companies in established centers of state-of-the-art knowledge. This new direction of research and development (R&D) internationalization is still an under-researched strategy for latecomers to gain competitive advantage. In order to uncover these mechanisms, this dissertation uses the case of a Chinese latecomer that recently achieved a leading position in the global telecommunications market: Huawei Technologies. The focus of this dissertation is on the mechanisms that enabled the company to obtain strategic assets through R&D internationalization into leading markets. In a mixed-methods approach, quantitative patent data and qualitative interviews are combined to trace the company’s development during its emancipation from a latecomer stage to an industry leader. The results show that Huawei does its most influential R&D at its offshore locations despite the risks and challenges of having core assets abroad. By doing so, the company focuses on greenfield investments instead of acquisitions by hiring experts at offshore locations. This way, Huawei leverages the experts’ embeddedness in the networks of the global telecommunications industry, which helps the company to overcome liabilities of outsidership as well as challenges of legitimacy and become part of the global industry community. Since the company has caught up on technological and organizational knowledge, it now splits its R&D tasks between research in centers of state-of-the-art technologies and development in China, in order to transfer innovative ideas from abroad to its domestic locations. Thus, the company gains output capability by bridging the lack of innovative capability at its domestic R&D location by employing experienced and creative experts at its offshore locations.