The relationship of foreign R&D units in Taiwan and the Taiwanese knowledge-flow system

In the development of knowledge-based economies there are two important issues of concern: one is the extent to which knowledge is shared or diffused and the second is the direction of the diffusion or flow. As globalization of technology increases, multinational enterprises (MNEs) require rapid growth of overseas research and development (R&D) capacity. This leads to two trends: the establishment of overseas R&D facilities and sharing knowledge within host countries. This paper investigated the R&D programs and facilities of foreign firms based in Taiwan and their impact on the flow of knowledge in Taiwan. The major findings reported suggest that the strategic importance of the Taiwanese market is the dominant reason for MNEs to establish overseas R&D units in Taiwan. In addition, foreign R&D investment had a significant impact on Taiwan's knowledge-flow., system. From these results some policy suggestions are offered, and implications for future research described. (C) 2002 Elsevier Science Ltd. All rights reserved.