Because of its complex and tacit nature, R&D has for long times been one of the least mobile
activities of Multinational Enterprises (MNE). The technological capabilities of firms were far
less globalised than their other activities, such as marketing and investment in production fa-
cilities.

What does innovation mean according to the opinion? Patenting:

Firms by large performed R&D and undertook patenting at their home country for
three main reasons. The first was the tacit, person-embodied non-transferable character of
much technological knowledge, which led to locational ‘stickiness’. Secondly, firms (includ-
ing MNEs) are strongly shaped by their home country’s specialisations and national innova-
tion systems (including, e.g., accumulated research skills and labour force skills).24 Thirdly,
also issues of security and protection played a certain rule. With increasing global governance
effort towards IPR this risk gradually diminishes.

We observe the effect of false indicators. As patents are used as a measurement for knowledge, an expansive interpretation in favour of the patent industry follows.

However, current evidence on flows of R&D suggests that the global business environment
has changed. Due to intensified global competition, companies have been forced to innovate
more quickly and develop commercially viable products and services more rapidly. Relevant
knowledge has become increasingly multidisciplinary and global in scope, making innovation
both more expensive and riskier. At the same time, some barriers to the dispersion of R&D
have become less significant owing to rapid developments in information and communication
technology and international regulation attempts. These trends imply changes in the govern-
ance of innovation in MNEs, with important implications for the role of subsidiaries in recog-
nising and exploiting the potential for innovation. This resulted in more global distributed
R&D networks25, and MNEs increasingly becoming integrators of globally distributed R&D
forcing them to manage their global innovation networks resourcefully with a right balance
between local in-house R&D, external R&D, and R&D performed at foreign affiliates or by
foreign partners.26 As a result both inward and outward foreign direct investment in R&D be-
came increasingly important. These changes are closely related to the paradigm of open inno-
vation27.

Open Innovation is a pefect phrase as it can mean anything. Here however, open innovation means a patent market.

The open innovation model is a dynamic (and less linear) approach where companies look
inside-out and outside-in. Increased R&D cooperation and higher reliance on external sources
have become important ways of knowledge sourcing in order to generate new ideas and bring
them quickly to the market. At the same time companies commercialise both their own ideas
as well as innovations from other entities, in which academic research occupies a major place.
Companies may also spinout technologies and intellectual property that were internally devel-
oped but are determined to be outside the core business and better developed and commercial-
ised by others. Multinationals heavily link up to start-up-firms, spin-offs and the public R&D
system through their permeable boundaries. Companies’ solid boundaries are transformed
into a semi-permeable membrane that enables innovation to move more easily between the
external environment and the companies internal innovation process

Full report: 13 Dec 2007 - 1207/07 - Conclusions on "Internationalisation of R&D - Facing the Challenge of Globalisation: approaches to a proactive international policy in S&T based on the report of the OMC Working Group "Policy approaches towards S&T cooperation with third countries"