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The American Attraction

Yet if the export of research dollars is a global phenomenon, the largest share of it pours into the United States. The magnet that draw this funding is talent: Companies open labs in the United States to gain access to world-class researchers. This explains the proximity of many labs to major research universities, which they regard as a key source of commercial innovation. The NEC Research Institute, for example, was able to recruit renowned computer scientists partly because it is adjacent to Princeton University. When Canon established a research center for work on optical character recognition, image compression, and network systems, the company chose Palo Alto to be close to Stanford University and Xerox’s famed Palo Alto Research Center. Mitsubishi Electric Research Laboratory, which conducts R&D on a range of information technology including computer vision, is next door to MIT.

Building your new R&D facility across the street from a famous university isn’t the only way to gain access. A number of foreign companies have formed agreements with leading U.S universities and research institutes to reach their talent. Ciba Geigy, for example, sponsors research at the University of San Diego, and the Swiss company Sandoz Pharma funds basic science at the Scripps Research Institute in San Diego. Shiseido, the Japanese cosmetics company, invested $90 million in the Harvard Medical School for skin research.

In the automotive industry, foreign laboratories gear their work to supporting U.S. manufacturing plants and customizing products for the American market. Nissan Design International’s close ties to the U.S. market enabled them to realize that Nissan could attract American car buyers by adding a stylish body to a pickup truck platform. The result: The Pathfinder, which launched the sport utility craze and transformed the entire automotive market.

While the funding for these labs comes from abroad, the style of work in them is very much indigenous. Offshore companies generally recognize that to recruit and retain American researchers requires adoption of an American style of management. In this respect, these labs differ markedly from foreign-owned manufacturing facilities. Japanese companies that run U.S. factories, for example, typically seek to transfer and transplant to their U.S. facilities manufacturing practices honed at home.

As a result, foreign laboratories in America are organized much like leading research centers of American universities. These labs encourage scientific and technical staff to work autonomously and publish widely. They sponsor visiting scholars and host seminars and symposia-practices that are unfamiliar in Japanese corporate labs. Says the manager of one foreign lab: “Everyone comes in and talks with us, and individual researchers can invite their peers for discussion.” One senior R&D manager I interviewed produced a company memorandum stating the mission as building a laboratory where scientists “do their basic research, regardless of whether or not it produces a salable product, or any product at all.”

By setting themselves up this way, companies can attract top-notch scientific and technical talent and build important connections to leading scientists and researchers at other institutions. Scientific labor markets differ from other labor markets in that they are driven to a large degree by reputation and prestige. This is why universities with leading scientists and departments are able to recruit the top new researchers and graduate students. These lessons are not lost on foreign corporations, which organize themselves like American R&D centers and universities to attract the top scientists, who in turn attract other scientists, bolstering the overall reputation of the organization.

Mitsubishi’s Electric Research Laboratories, for example, organized its Cambridge Research Center so that computer scientists, artificial intelligence experts, and software developers can explore how people work with computers and modern technology. Founding president Tohei Nitta and his counterpart Lazlo Belady started the lab in part to learn about the ability of American organizations to spur innovation. “We can be much more creative over here,” Nitta says, largely because of the synergies between the lab’s scientists and the rich university community of Cambridge.

Having labs in the United States also makes it easier to recruit top people back home and in other nations around the world. Michiyuki Uenohara, an executive director of NEC and founder of NEC Research Institute in Princeton, N.J., says the biggest dividend of operating the lab was that it increased the company’s ability to attract the best Japanese scientific and technical talent by showcasing the organization’s award-winning scientists.

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