Core competencies and the strategic management of R&D

There is an increasing concern amongst R&D managers and their immediate 'customers' and sponsors within companies to have reliable mechanisms to direct R&D simultaneously toward effective rapid innovation and accumulation of long term technological strength. This is leading R&D managers to seek analytical tools to help them identify technologies which have particular significance for competitive advantage, for multiple SBUs, and for longer term strategic positioning, and to manage them in ways which do not leave them at the mercy of business unit strategies, but situate them closer to the core of corporate strategies. This paper conducts an examination of the parallel literature on the idea of core competencies as a new paradigm in corporate strategy and shows that core competencies can be useful focusing devices for assisting in the creation of this linkage between the technological and non-technological aspects of the corporate strategy agenda. Implications are drawn out for: R&D decisions in the areas of shaping strategic research programmes; funding and organisation regimes for R&D and measuring the effectiveness of R&D.     

Exploratory Results on the Importance of R&D Knowledge Domains in Businesses with Different Strategies

A number of studies have described the consequences of the changing patterns in the business environment for R&D departments. Fewer studies have addressed the specific implications of the changing business environment for the agenda of R&D managers. Gupta and Wilemon (1996) have provided R&D managers with a priority list for action designed to be applicable to R&D departments independent of business strategy. However, a substantial body of literature suggests that the priority listing may be different for R&D departments in businesses with different strategies. Against this background this study sets out to determine whether the priority listing is different for Miles and Snow's (1978) strategic archetypes of prospectors, analyzers, defenders and reactors. A total of 72 R&D managers of businesses competing in industrial markets in the Netherlands provided the data to test for the existence of these differences. The results indicate that the priority listings are indeed different for R&D departments in businesses with different strategies. This finding has important practical implications. The priority listings can be used by R&D managers to assess which R&D capabilities have to be developed in order to match R&D strategy with business strategy and meet the criteria for getting more commercial payback from R&D in a changing business environment.     

Business Strategy, R&D Management and Environmental Imperatives

Abstract
Environmental imperatives are seen by many business leaders to represent a major issue for the 1990's and beyond. The debate about the environmental sustainability of economic activity has important implications for the development of business and places considerable emphasis on the need for planned corporate change. The strategic significance of the environment is particularly critical to R&D as this is characterised by long planning horizons and provides the setting for the development of future products and processes.
The purpose of this paper is to examine the connections between environmental imperatives, strategic change and R&D management. To this end the paper reviews the strategic nature of environmental pressures on business. From this base, consideration is given to the responses required by business, in meeting these pressures. The paper concludes by suggesting that the application of management techniques in concert with organisational change is needed for R&D management to build environmental considerations effectively into innovation. These suggestions can be used to gauge how far individual businesses have developed the systems and structures to enable them to move towards sustainability. The implication of the paper is that R&D management will not only need to apply new management techniques but will have to play a leading role in innovative organisational structures in order to fulfil the full potential of environmentally sensitive products and processes.     

Managing academic R&D as a business at K.U. Leuven: context, structure and process

In this paper, we elaborate on how academic R&D can be managed as a business. Based on the case of K.U. Leuven Research and Development, it is shown how an academic institution can develop the context, structure and processes conducive to managing academic R&D as a business. It is argued that universities that intend to take advantage of the economic opportunities of their R&D programmes, should leverage their innovation potential through appropriate strategies, organizational structures and management processes that allow them to manage part of their R&D portfolio as a business without hampering though the fundamental academic values and activities of research and teaching. This balancing act has been the responsibility of K.U. Leuven Research and Development for the last 28 years. It is the subject of the case study reported in this paper.     

Strategies for Linking Vertical Cooperative R&D to Commercialization in Korea

Since 1982, the government of Korea has actively promoted vertical cooperative R&D programs between government-sponsored research institutes (GRIs) and private firms. A number affirms participated in the programs because cooperative R&D could lower the risk and could contribute to rapid commercialization of many technologies. In this article, Chulwon Lee, Zong-Tae Bae, and Jinjoo Lee examine the effectiveness of participant firms' strategies for commercial utilization of cooperative R&D results, from the viewpoint of technology sourcing at the project level. The data have been obtained from 162 cases of vertical cooperative R&D projects from a diverse group of industries in Korea. Three different commercialization strategies are empirically derived through cluster analysis of the relative usage rates of cooperative R&D and of other supplementary technology acquisition methods. They find that the effectiveness of these strategy clusters varies significantly according to the types of innovation, that is, project-business relatedness. If the project belongs to an existing business area, in-house development augmented cooperative R&D strategy is the most effective. On the other hand, licensing-in supplemented cooperative R&D strategy is the most successful, if the project belongs to a new business area. Findings suggest that firms participating in cooperative R&D projects should try to utilize other supplementary technology acquisition methods in order to achieve commercial utilization of cooperative R&D results.     

Cost benefit and public policy issues

Abstract
The paper reviews the work done and conclusions reached on resource allocation to R&D in the public sector in the last twenty years, and examines what changes have been made in the field of R&D assessment. The paper is based mainly on the author's experience with the UK government's Programmes Analysis Unit (PAU) which was set up in the early 1960s.
The Unit's main remit was to examine and disseminate techniques by the use of which the benefit to the nation from possible R&D strategies, programmes and projects might be calculated. It was also called in to help review policy and carry out long-range forecasting. In the course of its existence — it was wound up in 1977 — it analysed many new techniques of analysis which have now passed into common use and took part in studies to support decisions at all levels from the macro-economic sector down to the individual project.
The author lists the benefits derivable from such analyses — helping to identify objectives, assemble total programmes, evaluate efficiency of technological transfer, carry out technology assessment and so on. But he warns of their limitations.
As for the present day, the author is unhappy about the importance given by the UK Government to the market as a test of value in decision-making about R&D, in so far as it leads to neglect of long-term issues and relies on uncertain causal relationships among critical inputs. Cost-benefit is adequate for dealing with short-term, small-scale projects. For larger projects with controversial long-term implications he advocates broader-based techniques such as multi-attribute analysis, which bring the interests of many parties into the judgment and take into account considerations such as the environment, finite resources and social     

In-house R&D management development — strategy and implementation in a major government R&D agency

Abstract
The paper describes the experiences of CSIR in developing an in-house capability and implementation process of R&D management development programmes. The conceptual approach of the laboratory-based R&D management development programmes is described. Different phases in the process of implementation are presented along with the case studies of recent training programmes in two different laboratories. Some of the key aspects of the training programmes —- successful implementation, relationship with policy-making, and improving R&D performance have been examined. The role of international co-operation in R&D management development is suggested. The paper also discusses the future prospects of R&D management development programmes in the country.     

A process view on managing quality during the creation of technical innovations: lessons from field research

Quality Management (QM) principles have left their marks on business practice for more than a decade. Amongst the many business functions that have faced the widespread introduction of QM standards and methodologies, the R&D function has been amongst the last to undergo their pervasive influence. The uncertain and ambiguous nature of the technical innovation process, most present during the conceptual and problem-solving (often R&D intensive) stages, has provided many arguments not to introduce 'traditional' QM approaches in R&D settings. These arguments are often based on a rather rigid and mechanistic view on QM. As recent insights show, this need not be the case. QM can offer an avenue to fundamentally scrutinize and re-think cross-functional integration strategies in innovative contexts. Therefore, the process of introducing QM principles in an R&D environment deserves close attention. This paper offers a field-based insight into these fundamental organizational and managerial issues.     

Synthesizing R&D planning and business strategy: some preliminary findings

The need for firms to compete in the longer run by offering superior products at competitive prices requires better integration of R&D, and technology in general, into business strategy development. A survey based on personal interviews of 40 respondents from "Fortune 500" U. S. industrial firms reveals that their shift in emphasis toward new product/process R&D is providing the impetus for placing R&D in a strategic context. However, R&D has not been fully integrated into the strategic planning process of many organizations. The results of the survey reveal that certain communication channels can be more fully utilized to meld R&D planning into business strategy. Specific suggestions to facilitate information exchange, dissemination of planning data, and integration of various R&D plans into a cohesive technology strategy are given.     

Research on the interface factor in the development and utilization of new technology

AbstractThe interface factor in the development and utilization of new technology is analyzed with questionnaire surveys. The interface factor is found to determine R&D performance in a study of large manufacturing companies in the United States and in a study of computer utilization performance in commercial banks in the United States. A comparison of the interface factor in the functioning of R & D in the United States and Japan suggests that interface problems may be less serious in Japan. Company experience is reported which indicates that the interface function can be controlled by management policies, procedures and practices. The need for greater attention to the interface factor by executives and by researchers on R & D management is a conclusion which follows from the findings presented in this paper.     

Absorptive capacity and openness of small biopharmaceutical firms – a European Union–United States comparison

The complementarities between internal capabilities and external linkages have been widely acknowledged in the open innovation literature, yet little is known about the extent to which internal capabilities affect firms' openness within different institutional contexts. This paper therefore empirically explores the relationship between absorptive capacity (ACAP) and openness in the United States and European biopharmaceutical sectors. Based on analysis of data from a large‐scale international survey of 349 biopharmaceutical firms in the United States, the United Kingdom, France and Germany, the results suggest that exploratory openness depends more strongly on the research and development (R&D) aspect of firms' potential absorptive capacity, whereas exploitative openness is more conditional on firms' realized absorptive capacity (RACAP). The results also highlight the major differences between firms' openness and ACAP in the United States and Europe – in the United States, firms' skill levels prove more significant in contributing to firms' engagement with exploratory relationships, whereas in Europe, continuity of R&D proves more important. Engagement with exploitative relationships, however, is more conditional on firms' RACAP in Europe only.     

Career paths, technological obsolescence and skill formation: R&D staff in Britain and Japan

This paper examines how scientists and engineers working in industrial R&D cope with the pressures of business and technological change and develop their careers. The data is drawn from a survey of nearly 1000 R&D staff working in large industrial corporations in Britain and Japan. Cross national comparisons are used to explore similarities and differences in coping strategies and in the human resource management challenges for companies. Particular attention is given to the problems of potential mismatch between RBD staff career orientations and available career opportunities.     

Knowledge management capabilities in R&D: a UK‐‐Japan company comparison

This paper uses a 'knowledge‐based' approach to compare the management of R&D in two leading chemicals companies, one British (ICI plc) and one Japanese. It describes key differences in the ways they integrate the 'near‐market' knowledge of business units and the scientific knowledge and technical expertise of R&D personnel in central R&D facilities. It shows that the same management practices that underpin superior 'integrative capabilities' in the Japanese firm, including central funding of R&D, job‐rotation and career structures and multidisciplinary project teams, also result in significant R&D weaknesses. The comparison demonstrates that different organisational mechanisms are needed to support (1) the development and (2) the leveraging of specialist knowledge within different innovation contexts . Firms must be able to strike a balance between integrative and specialist capabilities to get the most from their R&D. Moreover, the above characteristics which underpin these capabilities are often 'embedded' in the broader organisation making them difficult to emulate when they represent 'best‐practice' but also making them difficult to change in response to new threats and opportunities.     

Passing the food and agricultural R&D buck? The United States and China

The global geographical balance of food and agricultural R&D spending is shifting, characterized by a declining U.S. share and a rising middle-income-country share, propelled heavily by the rapid rise of spending in China. Based on our newly compiled data, we estimate that China now outspends the United States on both public and private food and agricultural research on a purchasing power parity basis. The public-private orientation of the research has also changed markedly, with the private sector now accounting for around two-thirds of the food and agricultural R&D spending total in both China and the United States. Our estimates indicate that China’s private sector tilts heavily towards post-farm R&D activities, whereas the U.S. private sector is split more evenly between on-farm and post-farm spending. While the intensity of Chinese investment in food and agricultural R&D (relative to agricultural GDP) is beginning to grow, it still lags well behind the food and agricultural R&D investment intensities of the United States and other higher-income Asian countries (e.g., Japan and South Korea). The development regularities we reveal in the longer-run trends are indicative of future R&D investment patterns with potentially profound long-run implications for the size, shape and accessibility of the global stocks of scientific knowledge that underpin food and agricultural sectors worldwide.     

Creating value while avoiding its destruction through R&D management and innovation

Value creation and capture remain a key but quite a challenging objective for many organizations. R&D and innovation management have to operate in a context of increasing complexity, particularly enriched by emerging technologies, new opportunities for transformation of business models, and multidimensional changes in market demands. This special section proposes new options to deal with this challenge. One paper contributes to the adoption of open business models by studying their antecedents and casual relationships. The three other papers propose using a different focus on value, avoiding its destruction by adopting different unusual mindsets; i.e. learning through failure, learning by deviating and investigating motivations for not participating in innovation communities.     

Determinants of R&D–Marketing Integration in High-Tech Japanese Firms

Although the R&D/marketing interface has been extensively studied in U.S. firms, this article reports the results of a study of this important relationship in Japanese high-tech firms. Based on published studies of U.S. firms, Mark Parry and Michael Song hypothesize that Japanese R&D managers' perceptions of the ideal level of R&D/marketing integration will reflect perceptions of both their firm's strategy and environmental uncertainty. They also hypothesize that perceptions of the level of achieved R&D/marketing integration are related to perceptions of organizational structure and climate. To test these hypotheses, they examine the survey responses of 274 Japanese R&D managers. Their analysis suggests that R&D managers' perceptions of firm strategy and the level of environmental uncertainty are significantly correlated with the perceived need for integration. Findings also indicate that R&D managers' perceptions of achieved integration reflect perceptions of the quality of R&D/marketing relations, the value placed on integration by senior management, the business background of R&D personnel and the risk-orientation of senior management.     

Quality and R&D1,2

This R&D Management Conference will be held on the campus of the University of Twente, Enschede, The Netherlands. The university is located in the picturesque countryside of Holland near the German border. The theme of the conference emphasizes the various links between R&D and quality. There is evidence that the quality of the R&D process has a significant impact on the quality, costs, timeliness and flexibility of other business processes, and products. Furthermore, Total Quality strategies and instruments could be useful in the management and organization of the R&D function. This conference is intended to act as a forum for academics and managers to exchange ideas and to develop new theories and techniques in this area.     

Changes in the strategic management of technology: results of a global benchmarking study

This contribution analyses main changes in the strategic management of technology of the world's most technology-intensive companies from western Europe, North America and Japan. The results presented here are based on a literature review and a survey which show the following main results: first, R&D and technology have become key cornerstones of corporate and business strategy. Second, there is a growing tendency to acquire technology from external sources throughout the sample. Third, internationalization of R&D plays a very important role in the strategies of the large companies investigated and the data shows that it will certainly gain further momentum. However, internationalization of R&D is confined to the Triad regions and is not 'global'. Based on our analysis, cornerstones of a future generation of R&D/technology management are developed.     

Declared essential patents and average total R&D expenditures per patent family

The sharp increase in SEP declarations and declaring firms emphasizes the necessity for understanding firms’ innovation investment behavior in standardization. This paper empirically investigates whether declared standard-essential patents (SEPs) and the declaring firm’s business model (operationalized as a firm’s location in the value chain) are associated with a firm’s innovation investment behavior. To this end, we measure firms’ innovation investment behavior through average total research and development (R&D) expenditures per filed patent family for publicly listed firms from 1999 to 2018. Our sample mainly includes major SEP family declarants. We rely on a binary business model taxonomy differentiating upstream and downstream firms. Within that setting, total R&D expenditures rise with increasing fragmentation of declared SEP families, suggesting that firms adjust their R&D investments to declaration developments in standard-setting organizations (SSOs). We also show that upstream firms have significantly lower total R&D expenditures than downstream firms, which could indicate structural differences in their intellectual property (IP) and R&D management processes. Our results can help SSOs and regulators better understand firms’ innovation investment behavior.     

A shift to external alliances for product development in the pharmaceutical industry

For a number of years, pharmaceutical companies have been departing from a tradition of strict vertical integration, looking to external sources for at least some of their novel technology and products. The aim of this study was to determine whether (1) this is a long term, industry-wide trend, or (2) merely a temporary or local response to acquire the technical capabilities of the biotechnology revolution of the 1970's, after which, with the new generation of technology in-house, they will revert to primarily in-house innovation. Analysis of secondary data on a representative sample of the fifteen largest drug companies in the United States, the United Kingdom, Germany and Switzerland indicated that between 1977 and 1987, these pharmaceutical companies increased their external R&D alliances nearly six-fold on average. A large and growing proportion of pharmaceutical companies' R&D alliances are formed with biotechnology firms which have proprietary technology, due to financial and innovative pressures. Far from being temporary, this resort to external sources of technology in the pharmaceutical industry follows the trends of the wider industrial world towards functional specialization. Thus, biotechnology companies are increasingly taking on the role of suppliers of innovation.