New technology development by Swedish MNEs in emerging markets: the role of co-location of R&D and production

Firm-level data from Swedish manufacturing MNEs show that their local R&D units in emerging countries now mainly develop new technology in co-location with manufacturing plants. This complements findings that co-located units have previously mainly locally adapted parent companies’ existing technology. This implies that co-located R&D units of Western MNEs in emerging countries now play a more important strategic role than was previously assumed, especially in China, India, and other Asian countries with large and growing markets, specific demand characteristics, strong domestic producers, rapid industrial and technological change, and a capability to develop and produce complex products and systems.