Economies such as China, India, and Brazil are emerging from the global recession with high expectations for growth, presenting global companies with new markets, ongoing access to lower costs, and unprecedented opportunities to broaden their research and development efforts in the coming years. Yet in our third annual McKinsey survey on R&D,¹ fully one-third of executives around the world say their companies are not doing any R&D work in emerging economies.²

Of the two-thirds of respondents whose companies pursue such efforts, the largest shares say their R&D is focused on either global product platforms or local innovation in emerging economies, as opposed to R&D for developed markets only, which respondents say is not a major focus of emerging-market R&D operations. Moreover, companies appear to be aligning their goals, whether it’s seeking lower development costs or gaining better access to customer insights, with their specific R&D focus in emerging economies.

That focus seems to matter more than whether or not companies are “high-performing innovators.”³ Indeed, there are few notable differences between the goals and practices reported by high performers and others, save one: every respondent among the high performers says his or her company conducts R&D in emerging economies.

Regardless of why companies conduct R&D in emerging economies, respondents broadly agree that the performance of managers for R&D in emerging economies tends to lag behind their counterparts in the developed world, that most decisions about R&D are made centrally, and that their companies struggle to share knowledge effectively.