Managing Global Innovation

Strategies for Worldwide Innovation Multidomestic Unilever Transnational Caterpillar International P&G Global Intel LowHigh Technological information needs High Low Market information needs Afuah (2003)

Strategies for Worldwide Innovation EmphasisDescription Multinational (multidomestic) Local responsiveness and differentiation Allows foreign subsidiaries to operate nearly autonomously; the firm can quickly sense and respond to local needs Global Global efficiencyGlobal activities are closely managed through central control from the headquarter. The firm capitalizes on economies from standard product design, global-scale manufacturing, and centralized control of worldwide operations. International Rapid deployment worldwide Foreign subsidiaries operate autonomously but are critically dependent on the headquarter for new processes, new products, and know-how. Transnational Global efficiency, local responsiveness, high innovativeness Integrate global activities through close interdependence and mutual cooperation between headquarter and foreign subsidiaries.

Factors Driving R&D Internationalization Boutellier et al. (2000)

Factors Affecting R&D Internationalization

Five Organizational Concepts of international R&D Organization a) Ethnocentric Centralized R&D b) Geocentric Centralized R&D c) Polycentric Decentralized R&D e) Integrated R&D Network d) R&D Hub Model Dispersion of internal competencies & knowledge bases Degree of cooperation between R&D sites Low Competition Cooperation

Different International R&D Organizations ConfigurationOrganizational structureBehavioral orientation a. Ethnocentric centralized R&D Centralized R&DNational inward orientation b. Geocentric centralized R&D Centralized R&DInternational external orientation c. Polycentric decentralized R&D Highly dispersed R&D, weak center Competition among independent R&D units d. R&D hub modelDispersed R&D, strong center Supportive role of foreign R&D units e. Integrated R&D network Highly dispersed R&D, several competence centers Synergetic integration of international R&D units

Different International R&D Organizations ConfigurationProsCons Ethnocentric centralized R&D Protected core technologies High efficiency Low R&D cost (scale & specialization effects) Short cycle times Low sensitivity for local markets Danger of missing external technology Not-Invented-Here syndromes Tendency toward rigid organization Geocentric centralized R&D High sensitivity for local market & technological trends Efficiency due to centralization Cost - efficient R&D internationalization Danger to neglect systematic internationalization Local content restrictions & local market specifications insufficiently considered Polycentric decentralized R&D Strong sensitivity for local markets Adaptation to local environment Usage of local resources Inefficiency & parallel development No technological focus Problems with critical mass

Different International R&D Organizations ConfigurationProsCons R&D hub model High efficiency due to coordination of R&D Avoidance of redundant R&D Exploitation of all available strengths Realization of synergies (quick recognition of local demand & the sustaining integration of global R&D input) High costs of coordination and time Danger of oppressing creativity & flexibility through central directives Integrated R&D network Coupling of specialization & synergy effects Global before local efficiency Organizational learning across many locations Exploitation & refining of local strengths High coordination costs Complexity of institutional rules and decision processes

Trends in Organizing International R&D High a) Ethnocentric Centralized R&D b) Geocentric Centralized R&D c) Polycentric Decentralized R&D e) Integrated R&D Network d) R&D Hub Model Degree of cooperation between R&D sites Low Competition Dispersion of internal competencies & knowledge bases Cooperation

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