Changing control strategies in industrial R&D

This article reports a comparative study of six in-house and eight independent industrial R&D organisations. These organisations are analysed in terms of three types of control strategy - market control, hierarchical control and professional control. The paper suggests that the professional control strategy, emergent after World War Two, is now being increasingly challenged by market control strategies. R&D organisations under or adopting market control are shown to enjoy marked productivity advantages. The distinctive managerial practices of market controlled R&D are analysed. It is concluded that many in-house laboratories have much to gain by partial adoption of these market control practices.     

The allocation of resources for R&D in the world's leading pharmaceutical companies

A survey of 45 leading pharmaceutical companies has been used to investigate aspects of their Research and Development (R&D) strategies, the allocation of resources including the financing and staffing of R&D functions, and the numbers of New Chemical Entities (NCEs) in the development process. The companies included the top ten by R&D expenditure in 1992 (top 10 companies). The study identified characteristics of leading companies and provided comparative data. The principal findings are that:
top ten companies had the highest R&D to sales ratios, progressed more NCEs after the drug candidate selection stage in 1992 and had achieved a greater geographical decentralization of staff than any other company.
Japanese companies differed in some respects from western companies, even those of a similar size. They operated with smaller clinical and regulatory affairs functions and made detailed plans for R&D expenditure further ahead than western companies, on average, more than 5 years compared with 3 years.
an increase in aggregated R&D staffing had occurred between 1990 and 1992 in 33 companies for which data for both years were available and staff numbers had decreased in only five of those companies.
top ten companies differed from others in their apparent productivity measured in terms of staff or R&D expenditure per NCE after the drug candidate selection stage, utilizing more staff and having greater R&D expenditure per NCE.
The results also appear to indicate early signs of a change in the structure of the industry according to R&D expenditure, which has since become more apparent. There was a distinct polarization by R&D budget size among the respondent companies: five companies were spending $900m or more on R&D in 1992 while the majority of the rest were spending less than a third of that amount.     

Large European manufacturers and the management of R&D

At the end of 1984, for the third consecutive year, a research team from INSEAD administered a survey of the largest manufacturers in Europe. This survey attempts to provide an insight into the technological and manufacturing strategy designed and implemented by these large manufacturers.
Each year since 1982 about 150 companies have completed the questionnaire, and of these 150 replies about one third are repeat answers. The database thus covers about 350 companies. As a consequence this allows us not only to analyse the static picture for a single year, but also to draw a dynamic picture of how thinking about technological and manufacturing strategy is changing within the European Manufacturing Industry.
An analysis of the questionnaire's results allows us to assert some hypotheses about:
a. Changes in the length of the product lifecycle.
b. The importance of process engineering and proprietary process know-how.
c. The interface between manufacturing and research and development as perceived by the manufacturing side.
Since a similar survey is conducted for North America and Japan at the same time, it is possible to posit the European manufacturers vis-à-vis their global competitors for some of these issues.     

R&D in China: an empirical study of Taiwanese IT companies

This study extends the research on R&D (research and development) internationalization to a new environmental context (two Asian newly-industrialized economies, mainland China and Taiwan). Based on a survey of 56 major Taiwanese information technology (IT) companies, the status of R&D internationalization with Taiwan as the home and mainland China as the host is investigated. Human-capital-augmentation is found to be the key motive for Taiwanese IT companies to extend R&D activities to the mainland. Accessing capable yet cost effective local engineers with an additional benefit of geographical and linguistic proximity is the major context of this motive. The location decision is based on three considerations – access to engineers, proximity to manufacturing site, and competition avoidance. Finally, three operational patterns of conducting the international design and development (D&D) activities are categorized, which are 'home-base-integration', 'host-base-integration', and 'product life cycle'.     

Dimensions of innovative climate in Chinese R&D units

This paper reports on the application of Rickards' and Bessant's 'Creativity Audit' in 141 research and development units in the People's Republic of China during 1982 and 1983. The objective of the paper is multifold: 1) to employ factor analysis in order to determine key dimensions of innovative climate and through these to be able to reduce the original instrument to a more convenient size; 2) to compare the concept of innovative climate between R&D performing units in a developing country, and an economy characterized by relatively strong central control, with the original British data; and 3) to utilize the dimensions of innovative climate to consider some hypotheses concerning the performance of R&D in developing countries and in China in particular.     

A comparative analysis of R&D project evaluation methods

A large number of methodologies for Research and Development (R&D) project evaluation have been developed and reported in the literature over the last few decades. Almost all of this literature focused on the mechanisms and underlying theoretical foundation on which the evaluation methods are based. Very little attention has been paid to the effectiveness and suitability of the techniques, especially a comparison of the techniques. This paper presents a comparative study on a number of classes of R&D evaluation methods based on the Analytic Hierarchy Process. We look into the various factors and characteristics of R&D evaluation methods that affect their suitability. A sensitivity analysis was also carried out to determine the critical factors.     

An analysis of R&D objectives in Indian manufacturing companies

The need for R&D has been well recognized by the manufacturing companies in India, but it is felt that R&D has not been generally effective in having a marked impact on the growth of their business. One of the reasons for this could be discrepancies in their R&D objectives. This paper presents the results of an empirical study of the R&D objectives of a few manufacturing companies in India viewed against the background of their environments. The analysis points to the discrepancies observed in R&D objectives and hints at suitable corrective measures.     

Aspects of project control in R&D

This paper examines the concept of project control in the context of an R&D laboratory, and reviews some of the methods of presenting control or monitoring information that have been found of use by management for different types of work. The concepts described are those which the author has found of practical value in his own work, and which also figure in some R&D Management training courses within British Gas.     

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.     

The economic impact of subsidized industrial R&D in Israel

Israel offers contingent subsidies to selected industrial R&D projects, with the purpose of creating high–quality jobs, reducing the trade deficit, increasing productivity and promoting growth. In 1987–94, 1,200 firms received $1,400 million of subsidies in support of $3,500 million of R&D (in constant 1996 dollars). We estimate that this R&D generated more than $31,000 million of sales, increasing industrial employment by about 10% and contributing to the trade balance a sum slightly less than the entire private sector deficit in the current account. It added 0.3% to GDP in increased productivity, each dollar of supported R&D adding an additional $0.45 to GDP and earning the economy a direct annual return of 13.4%. Electronics, broadly defined, received roughly half the subsidies while accounting for nearly two thirds of the gains; small firms that received one sixth of the subsidies contributed over a quarter of the gains.     

How R&D is coordinated in Japanese and European multinationals

What are the suitable forms and mechanisms for the coordination of international R&D and innovation processes in multinational corporations? This paper sets out to answer this question by exploratory research and interviews in 18 European and Japanese companies. As a conceptual background, four different categories of coordination mechanisms are generated (‘structural’, ‘hybrid’, ‘informal’ and ‘internal markets’). The empirical results show that Japanese companies make intensive use of personal contacts, informal communication and socialisation whereas European enterprises rely more on internal markets in R&D.     

The structure and organization of Chinese industrial R&D activities

The paper is an account of the authors visit to the Peoples Republic of China in 1981. It shows how a highly centralised state deals with innovation, in this context innovation being equated with R&D. The first part of the paper deals with the way the responsibility for planning and execution of scientific and technical effort is distributed through the state and industry. The second looks at the manpower and organisational problems resulting from the economic backwardness of the country and past mistakes in trying to overcome it.     

Managing tension in coopetition through mutual dependence and asymmetries: A longitudinal study of a Norwegian R&D alliance

Strategic alliances between competitors (coopetition) is perceived to be full of tensions that needs to be managed. This study explore the evolution of a Norwegian coopetition alliance, through how firms handle tensions over time. The study finds that the firms experience a mutual dependence towards one another and that this dependence evolves over time. In the early phases of a coopetition alliance firms handle tension by relying on a structural dependence with their partners whereas firms move towards a more harmonious relationship with their partners by building a psychological dependence through trust and generosity. Further, the results indicate these dependencies might reduce the possible tensions related to asymmetries in size and knowledge between firms.     

Barriers to scientific and technical knowledge acquisition in industrial R&D

An understanding of how companies acquire external knowledge is important for any organisation which participates in technology transfer partnerships. The process of external knowledge acquisition within the development function of the pharmaceutical industry is described. Six pharmaceutical companies participated in this study. Group depth interviews were conducted with scientists from a wide range of disciplines and at different levels of seniority within their companies. Senior managers and information officers were interviewed individually. The findings indicated that, although this industry is a leader in formalised information services and commercial database usage, even here significant barriers to the acquisition of scientific and technological knowledge exist. In several of the companies examined the process of information acquisition is not addressed strategically and implemented at laboratory level.     

Managing Relations Between R&D and Marketing in New Product Development Projects

This article examines the R&D/marketing interface conditions found within an extensive data base of new product development innovation projects. The incidence of different types of problems between these two important functions are analyzed and the effects of these observations on project outcomes are discussed. The article contains a number of recommendations for increasing the success rates of innovation projects by using a model that improves conditions at the R&D/marketing interface.     

The accuracy of project cost and duration estimates in industrial R&D

Abstract . This study of the accuracy of cost and duration estimates, both initial and intermediate, for industrial R&D projects, is based mainly on analysis of the records of 475 projects in four varying research organizations. Mean ratios of actual to estimated cost ranging from 0.97 to 1.51 are obtained, and mean ratios of actual to estimated duration from 1.39 to 3.04. The results are generally similar to those of other British and American studies, with which they are compared.
There is no evidence that the information gained as projects progress enables their future cost and duration to be estimated more accurately; at best, the accuracy of such estimates remains constant. No effect of project size on estimate accuracy is found; effects of project length on accuracy, and of time (i.e. increasing experience) on accuracy are found only in one organization each. The pattern of expenditure over time is examined, and found on average to be not far from linear, though with wide individual project variations.
When the individual project ratios are reduced by constant factors representing optimistic or pessimistic bias (derived from the mean ratios, and assumed to be characteristic of the firm), and then subjected to a log transformation to make their distribution more symmetrical, the remaining variation, which is a measure of the inaccuracy of estimation for the individual projects, is closely similar in the four organizations, and not greatly different in the organizations covered by other studies when the data are similarly treated.     

Determinants of the foreign R&D locational decision in the pharmaceutical industry

Locational determinants are an important input into any internationalisation process, but they are difficult to rank and measure. This paper describes an attempt to do both in the arena of the international pharmaceutical industry. In particular, the dispersal of R&D activities to six target countries (US, UK, West Germany, France, Italy, Japan) is examined using thirty location-specific factors which are analysed in detail. In addition, indicators of differentiation between the perspectives of US and European firms are derived.     

The effectiveness of different mechanisms for integrating marketing and R&D

The integration of marketing and R&D is a major concern for companies that want to improve their new product performance (NPP). For this integration, companies are using mechanisms such as physical proximity, cross-functional teams, and job rotation. This study examines the effectiveness of these mechanisms by developing a model that distinguishes between indirect effects of mechanisms on NPP (i.e., through a higher level of integration) and direct effects. The model is tested with data collected from 148 pharmaceutical companies. We were able to measure and compare the effectiveness of seven different integration mechanisms, which produced insights that are interesting and relevant for theory as well as practice.
We found that housing marketing and R&D closer to each other and using an influential cross-functional phase review board are the most effective mechanisms to foster integration. Equal remuneration and career opportunities for marketing and R&D and cross-functional teams are somewhat less effective, whereas personnel movement and informal social group events contribute little. ICT appears to be a very effective tool for enhancing NPP. ICT not only fosters integration between marketing and R&D, but it also has an independent direct positive effect on NPP. Through ICT the day-to-day communication between the different parties in the companies becomes much easier, and we think that this fosters the knowledge creation process within marketing and R&D. For cross-functional phase review boards we found a negative direct effect on NPP. Notwithstanding its strong positive effect on integration, a price is paid in terms of NPP. This may be related to the amount of formalization and complexity accompanying this mechanism.