Global Innovation – Globalisation

Generically speaking, globalisation is ‘the worldwide movement toward economic, financial, trade, and communications integration’ (thebusinessdictionary.com, 2011).

It has been said that globalization implies the opening of local and nationalistic perspectives to a broader outlook of an interconnected and interdependent world with free transfer of capital, goods, and services across national frontiers. However, it may hurt smaller or fragile economies if applied indiscriminately (thebusinessdictionary.com, 2011).

As businesses become increasingly global, corporate innovation strategies are also becoming more global as companies attempt to globalise research and development (R&D) departments and gain international market access and insight (Changsu and Jong-Hun, 2010, p43). Tidd et al, state that following the ‘globalisation’ of product markets in large firms R&D activities should also be globalised in order to create interfaces with specialized skills and innovative opportunities at a world level (1998, p138). However despite this need for firms to be global, many are in fact already running on a global basis, however, does this necessarily mean that they are globalised? It has been stated that in and around 1990;

• The world’s largest firms performed about 11% of their innovative activities outside of their home countries.
• Firms based in the leading R&D countries (i.e. USA, Japan, Germany) perform more than 80% of their innovative activities at home.
• Most of the foreign innovative activities are performed in the USA and Germany, they are not globalised. 
• Large firms’ foreign innovative activities reflect their own and their home country’s strengths and not that of their host countries.
• Within each industrial sector, business firms’ innovation intensity was negatively correlated with the share that was located in a foreign country.

(Patel, 1995).

Here it seems that Patel is suggesting that despite many firms running on a global basis, many of these firms are not actually globalised. How then is it that a company becomes globalised?

The iPod is a perfect example of a globally innovated product, combining technologies from the USA, Japan and a number of Asian countries (Linden et al, 2007, p2). Before the iPod many electronic devices were developed and manufactured in the home country of the company in question. However supply chains in the global electronics industry have steadily disaggregated across corporate and national boundaries (Sturgeon, 2002; Dedrick and Kraemer, 1998. CITED: Linden et al, 2007).

Linden et al, also suggest that in order for a company such as Apple to be successful in global innovation they need to recognize how their products create potential value and then negotiate over its division with their partners. As well as this he suggests that a successful firm understands that the creation of value and profits are needed all along the supply chain to sustain innovation by all participants (2007, p2).

Despite the products of Apple being globalised the management of Apple as a company is relatively un-globalised. Dr. Rolf-Christian Wentz suggests that based on its superior product design and superior product usability globally, until now Apple seems to be rather a hesitant supporter of a growing globalisation of innovation management. Apple is still very centrally organized with a strong US focus (The Innovation Machine, 2008).

This proves that just because one aspect of a company may be globalised, it does not mean that the company is globalised as a who, and that it is in fact extremely difficult to achieve complete globalization of a company as a whole.

I have also found this short video highlighting some of the Pros and Cons of Globalisation.

References

Changsu, K. Jong-Hun, P. (2010). The Global Research-and-Development Network and Its Effect on Innovation. Journal of International Marketing. Vol. 18, issue 4 pp43-57.

Linden, G. Kenneth, L. Kraemer, Jason, D. (2007). Who Captures Value in a Global Innovation System? The case of Apple's iPod. Personal Computing Industry Center (PCIC) Accessed from: http://www.signallake.com/innovation/AppleiPod.pdf [Accessed: 9 December 2011].

Patel, P. (1995). The localised production of global technology. Cambridge Journal of Economics. Vol. 10, pp141-153.

The Business Dictionary (2011). [online]. Accessed from: http://www.businessdictionary.com/definition/globalization.html [Accessed: 9 December 2011].

The Innovation Machine (2008) [online]. Accessed from: http://www.the-innovation-machine.com/?p=86 [Accessed: 9 December 2011].

Tidd, J. Bessant, J. Pavitt, K. (1998). Managing Innovation’ Integrating Technological, Market and Organisational Change. Sussex: John Wiley and Sons Ltd.

Youtube. (2010) Globalisation Pros and Cons. [online]. Accessed from: http://www.youtube.com/watch?v=SyJ23a7_fvQ [Accessed: 9 December 2011].