Global technology development by colocating R&D and manufacturing: the case of Swedish manufacturing MNEs

In this study we analyze the role of colocation between research and development (R&D) and manufacturing for global technology development by multinational enterprises (MNEs). The extant literature suggests that the main strategic role of colocated R&D units is to locally adapt existing products and processes. However, data from 146 foreign R&D units of Sweden’s 17 largest manufacturing MNEs in 2013 show that they instead mainly develop new technology, not only for the local and regional markets, but to a large extent for the global market. A likely explanation is that colocation positively contributes to joint problem-solving and transfer of tacit knowledge between production and R&D personnel, all of which is necessary in new product development, especially in industries characterized by complex products and systems and rapid technological change. A theoretical implication is that depending on industry characteristics, internal cross-functional linkages between R&D and manufacturing can be more critical than external supply- and demand-side factors when it comes to influence where R&D units are located globally.