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Put a Brake on High-Tech Alliances : International Ties Help Firms, but Not Always the Nation

<i> Robert B. Reich teaches political economy and management at Harvard University's John F. Kennedy School of Government. </i>

There’s much talk in Washington these days about America’s technological slippage. The costs and risks of staying in the high-tech race are rising so fast that many American firms can’t do it alone.

The new answer: Pool your research and development funds with other American companies, add government subsidies and resources from national laboratories, and ally yourselves with American universities. Then the nation’s technological lead will be regained and your profits restored.

For years Japan has been convening such research-and-development partnerships, sweetened by government funding. Western Europeans--with 1992 on their minds--are doing much the same, sponsoring hundreds of industry-government-university consortia aimed at technologies of the future. Now even Washington is getting into the act, the free-market incantations of the Reagan and Bush Administrations notwithstanding.

Support is building for government-sponsored consortia in superconductive materials and high-definition television. Meanwhile, the Pentagon has sunk its first $100 million into Sematech, an alliance of American semiconductor makers aiming to close the gap with the Japanese.

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More generally, the Defense Science Board now urges the creation of an “industrial policy committee,” under the President’s national-security adviser, to spur joint high-tech research projects among American corporations. And Commerce Secretary Robert A. Mosbacher and Atty. Gen. Dick Thornburgh suggest further relaxing the nation’s antitrust laws to make it easier for American firms to join together for research, development and commercialization in order to compete better with foreigners.

Where will all this lead? One scenario has governments, businesses and universities teaming up within each of the world’s three great technological power blocs--Japan, America and the European Community--in a contest for 21st-Century technological preeminence.

Not so fast. National alliances may be the rage in Washington, but American high-tech corporations are playing a different game. They seek financial or technical help from whomever will supply it on the best terms, anywhere around the globe. Even as they partake of government subsidies and antitrust immunities at home, most American high-tech firms are simultaneously teaming up with Japanese and European firms abroad.

Texas Instruments, America’s leading producer of semiconductors, has joined with Hitachi to design and produce a superchip that will store 16 million bits of data. Meanwhile, Motorola, America’s second-largest producer, has paired with Toshiba to research and produce a new generation of computer chips. And Sun Microsystems, the darling of Silicon Valley, has just teamed up with Fujitsu to produce a new generation of workstations. In these deals and others, American firms will be sharing their latest technology with their Japanese partners and vice versa. And much of the research and production will occur abroad.

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In fact, it’s hard to find a large American high-tech company that is not in some sort of partnership with a foreign firm. And American companies are doing research and development all over the world. National boundaries are irrelevant to these global strategies. America’s high-tech research, development and production now span the globe.

America is being cuckolded. Why give subsidies and antitrust immunities to American high-tech firms if what’s discovered within a national consortium is easily transferred to the company’s global partners, or its overseas researchers? The nation’s technological gap with Japan will never close if, for example, Texas Instruments takes the insights it gains from its membership in Sematech and applies them to its Japanese venture with Hitachi.

Japanese and European high-tech consortia operate by different ground rules. Their strategies are global, but their interests are indisputably national. Their members occasionally work with American companies--even do research here--but primarily for the purpose of transferring technical know-how back home. The overarching goal of these efforts is to give their nations’ researchers and engineers a deeper understanding of the new technologies, not simply to preserve the profitability of their high-tech firms. When the Japanese wanted to learn about how to make jet airplanes, for example, Japanese firms allied themselves with Boeing, which agreed to teach them in return for a fat fee.

America should follow the same tacit strategy--limiting membership in government-sponsored consortia to firms committed to developing the technological competence of the American work force, rather than merely improving their own balance sheets. Global alliances would not be barred, but terms should be subject to negotiation.

A national strategy for high technology requires that distinctions be drawn between the interests of American companies and those of the nation. To master the technologies of the future, it’s not enough that American firms be competitive. Americans themselves must gain the mastery.


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