R&D subsidiary isolation in knowledge-intensive industries: evidence from Austria

We investigate R&D subsidiary isolation within Multinational Corporations (MNCs) competing in knowledge-intensive industries. For such MNCs, accessing knowledge and nurturing the innovative potential of R&D subsidiaries is vital for on-going competitiveness. This, according to conventional thinking, requires integration of the subsidiary within the host country as well as internally within the MNC. Recent studies have shown, however, that overseas subsidiaries can become isolated (i.e., losing requisite integration), even in high-technology sectors. We tackle this issue by focusing on organizational factors at corporate and subsidiary levels that have the potential to explain subsidiary isolation. We analyze a sample of 45 foreign-owned Austrian subsidiaries undertaking R&D in knowledge-intensive industries using a combination of questionnaire and secondary data. The results suggest that parent and subsidiary experience, the degree of early-stage research conducted by the subsidiary and the use of training and rotation practices by the subsidiary, all act to counter isolation. Interestingly, we find that proximity between parent and R&D subsidiary does not play a significant role in predicting isolation. We also show how these factors influence communication frequency between the R&D subsidiary and various actors within the internal and the external networks in different ways.     

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.     

Managing foreign R&D laboratories in China

This paper focuses on the management of R&D units established by foreign companies in China, investigating R&D missions, site build-up, integration with the parent organization, and overall performance measurement. The research is based on 37 qualitative expert interviews with local R&D directors and managers conducted between 2001 and 2004, using a semi-structured research questionnaire, and semi-quantitative research done on 199 foreign R&D labs in China. Cultural influences on R&D management, location advantages, expatriate involvement, and organizational evolution of local laboratories are discussed. We find that foreign R&D laboratories in China are not only important vehicles for local market development but also increasingly important sources of locally developed technology.     

Determinants of increasing R&D complexity in affiliates of manufacturing multinational corporations in the UK

The aim of this paper is to evaluate the technological trajectories of the UK subsidiaries of manufacturing multinational corporations as measured by changes in their R&D complexity over a five year period. The data was gathered from a postal survey of 500 randomly selected subsidiaries in the UK; of the respondents that had been established in Britain for at least five years, 16 were found to demonstrate decreasing and 48 increasing complexity of R&D activities. These 64 firms were compared across a number of strategic variables, and a powerful logistic regression model developed that predicts technological trajectories with great precision.
The key variables in the model were differences (over five years) in sales volume, decision making autonomy about human resource matters in the subsidiary, sensitivity to the needs of sister subsidiaries when developing new products, heterogeneity of the subsidiary's markets, and the degree of localization of certain control functions. The central lesson for the subsidiary R&D manager is that HQ undertakings about R&D strategy as it concerns the subsidiary may be fairly accurately evaluated via the model and its five strategic variables.     

Initial directors of international R&D laboratories

Technology intensive companies establish new R&D laboratories in regions of high innovation and near centers of scientific excellence. Identifying the right R&D director to head up such greenfield investments is central to the success or failure of the new lab. Analyzing 162 interviews with senior R&D managers, we identify eight different directorship profiles. Examples of new R&D sites and their directors include IBM, Daimler, Leica, Microsoft, Xerox, Lucent and Ciba. The initial mission and the intraorganizational and intraregional integration of the new lab are principal factors for director selection, determining expatriate or national management, cultural and ethnic familiarity, as well as local or international transfers. The analysis of succeeding R&D directors indicates a trend towards locally rooted yet organizationally competent R&D managers. The paper concludes with desired qualifications of director candidates for newly established international R&D sites.     

Evolving headquarters‐subsidiary dynamics in international R&D: the case of Japanese multinationals

The paper identifies the evolving nature of headquarters‐subsidiary relations during the whole process of R&D internationalization. In‐depth data on five Japanese multinationals revealed that the role of overseas laboratories actually evolved over time, from the 'starter' to the 'innovator' and then to the 'contributor'. Such a shift in role of overseas laboratories affected the nature of headquarters‐subsidiary relationship accordingly. 'Semi‐connected freedom' was identified as an optimal condition for the overseas laboratories to reconcile the two competing pressures: need for local autonomy and need for internal information connectivity. Various managerial steps were suggested for the laboratories to reach that state: increase in process linkage, active broker's role, short‐term socialization, and project‐level socialization. Some practical and theoretical implications were drawn from this research, and future research direction was suggested.     

Critical issues facing R&D managers in China

R&D managers in China experienced significant changes in the past decade, in particular because of Government policies of economic reform and opening to the outside world. These developments have brought about a number of rather specific R&D management issues and problems. The paper addresses the main problems faced by R&D managers in China. First, the current situation of R&D management in China is discussed, as well as the future developments. The paper then presents a case study of the CISRI (Central Iron & Steel Research Institute), a large comprehensive R&D organisation in Beijing. The analysis leads to the critical issues in CISRI's R&D management. After that, a further investigation is described into the trends of Chinese R&D management. The outcomes described focus on the future of R&D management in China as well as on the integration of Western R&D management theory in China. The paper concludes with the major issues and recommendations for the further development of R&D management in China.     

R&D employee tenure in MNC subsidiaries: the role of institutional distance and experience

Long tenure of research and development (R&D) employees helps organisations to utilise employees' knowledge over a sustained time period and strengthen their competitive advantage. It also allows organisations to benefit from the training investments made on their R&D employees. Thus, identifying the determinants of R&D employees' tenure is crucial for designing effective R&D employee retention strategies. This paper analyses the factors explaining R&D employees' tenure in the subsidiaries of multinational corporations (MNCs). Building on institutional theory, we claim that formal and informal institutional distance between MNCs' home and host country might lead to R&D employees' short tenure in subsidiaries. We further suggest that R&D employees' international experience and MNCs' host country experience play a moderating role. We find support for our hypotheses by mobilising an original database that combines patent data and the LinkedIn profiles of 939 R&D employees in 256 MNC subsidiaries in India.     

MNE competence‐creating subsidiary mandates

The determinants of R&D intensity differ between subsidiaries in a multinational enterprise (MNE). Previous literature suggests that whether a subsidiary achieves a competence‐creating output mandate depends on the qualities of its location. R&D strategies in competence‐creating subsidiaries are supply‐driven while those in purely competence‐exploiting subsidiaries are demand‐driven. Using data on U.K. subsidiaries of non‐U.K. MNEs, we find that the level of subsidiary R&D depends on MNE group‐level and subsidiary‐level characteristics as well as locational factors. The R&D of mandated subsidiaries rises with acquisition, but for non‐mandated subsidiaries R&D falls upon acquisition. MNEs that grow through acquisition have more inter‐subsidiary R&D diversity. Copyright © 2005 John Wiley & Sons, Ltd.     

Clustering and the R&D management of high-technology small firms: in theory and practice

Much of the policy assistance for high-technology small firms (HTSFs) over recent years has been directed at encouraging their research and development (R&D) collaboration through local networking and technology transfer. Following a consideration of why HTSFs are formed, and how they perform R&D in order to cope with the competitive environment, this paper explores the value of external collaborative R&D to internal R&D management, inside geographically concentrated incubators, science parks or clusters. It is concluded that, although R&D collaboration with external partners occurs in limited instances, much HTSF R&D is highly confidential, competitive and wholly internalised. This tendency, as far as it relates to R&D management, is significant in that it minimises the likelihood that local management collaboration between co-located firms will improve the performance of R&D projects.     

Motivations and barriers of foreign R&D activities in China

The continued growth of the Chinese economy accompanied with the expansion of international investment in China has led to an increase in foreign research and development (R&D) activities in the country. Aside from the rising importance of R&D internationalization, research on foreign R&D in China has been neglected in the past due to its emerging status. In this article we examine drivers and barriers for conducting R&D in China. The focus of our research is on transnational companies typically characterized by decentralized R&D activities. Our research is mainly based on qualitative interviews with senior R&D managers. The success of foreign R&D activities in China strongly depends on the realistic estimation of its advantages and the proper identification and handling of barriers.     

International R&D project evaluation by multinational corporations in the electronics and IT industry of Singapore

This paper explores a number of variables associated with the evaluation of international R&D projects by multinational corporations (MNCs) in the electronics and IT industry of Singapore. Empirical analysis of the data collected from R&D managerial executives suggests a series of considerations in relation to their R&D investments. It is desirable if R&D can create a potential impact on the growth of their regional and international businesses. In considering the risks associated with an R&D project, a balance approach would be appropriate when demanding a return on investment. In particular, the consistence with customer demands, the achievement of time‐based competitiveness, the training of R&D manpower and the development of conducive innovation environments are fundamental to the success of international R&D projects.     

Problems faced by R&D managers in Canadian federal government laboratories

The paper conducts a critical review of the problems faced by middle to first-line managers in managing R&D in Canadian government laboratories. The data come from the published literature, interviews with R&D managers, and information obtained from government employees undergoing training as R&D managers.
The problems are numerous and serious. They arise from a multiplicity of causes related to underfunding and bureaucratic management practices that do not allow for the special nature of R&D. Hiring freezes, staff reductions, travel restrictions and reductions in training budgets are all consequences of underfunding, resulting in an aging workforce and technological obsolescence. Bureaucratic administration rules set by central agencies constrain the freedom of R&D managers to manage effectively, and limit low-level participation in policy-making and planning. The result is that too many management posts are filled by under-achieving scientists and engineers, with resultant consequences for originality and efficiency.
The authors believe that the only cure is to undertake proper funding, recognise the special operational needs of R&D management, and select managers for managerial ability in addition to technical competence.     

Network positioning and R&D activity: a study of Italian groups

Traditionally, R&D studies focus on organisational characteristics and internal context factor effects on a firm's R&D activities. This paper extends previous research by analysing firm–level R&D expenditures in the wider context of inter–organisational networks. Using sample of 2002 manufacturing firms in Italy, it provides evidence that R&D intensity is linked to a firm's positioning within an industrial group's hierarchy. Further tests on the antecedents of R&D expenditures are carried out in relation to the effects of firm characteristics and industry factors. Important findings include a significant and positive association between R&D intensity and the firm's size, performance, intangible assets and industry concentration. These findings suggest that, in addition to firm–level factors and its market environment, network resources and organisation may play an important role in driving the intensity of the firm's R&D expenditures.     

International management of R&D: The Swedish Experience

This paper summarizes the results of in-depth case studies of international R&D management in four Swedish multinational corporations. The results suggest that foreign volumes and shares of R&D expenditures are rapidly increasing. Through a rapidly increasing number of foreign acquisitions, foreign R&D laboratories have been added. As part of international rationalization of production, foreign units have been given global product mandates with responsibility both for manufacturing and R&D. In maturing foreign subsidiaries, routine technical activities have often evolved into proper R&D. Tight labour market conditions for engineers in Sweden have made it increasingly necessary to exploit existing technical capacity, regardless of location.
Concurrently, companies face new pressures for international coordination and control of R&D. Coordination is required to reduce product differentiation, to facilitate technology transfer and to ensure the technical and market compatibility of products and components developed at different locations but sold as part of total systems. Drawing on the experience in the four investigated companies, the paper discusses how systems and procedures can be developed to meet the need for coordinated international R&D management.     

Towards networked R&D management: the R&D approach of Sonera Corporation as an example

In this paper the authors delineate the challenges of a dynamic environment to R&D management. The authors build on most recent ideas, such as the dynamic capability view of the firm, as strategic foundation for modern R&D management. Collaboration is emphasized as a meta-capability for innovation. These ideas are merged into a 'Networked R&D Management' approach that emphasizes internal and external collaboration networks as critical for companies operating in a dynamic business environment. The approach is illustrated with ICT industry as an example. The implementation of Networked R&D Management is reflected in the illustrative case discussion of R&D management of Sonera Corporation.     

Establishing the determinants of internal reputation: the case of R&D scientists

This paper discusses the factors which determine the human resource reputations of science-based organisations. Reputation, in this context, refers to the extent to which scientists regard the department in which they work as a good employer, and implicitly, a good place to practise science. As a consequence, this study is concerned with internal rather than external reputation. The R&D departments of ten science-based organisations employing approximately 1500 scientists were included in the study. The sample of 402 respondents was representative, in terms of age, sex, qualifications and experience, of the population of scientists in the organizations included in the research. All employees were educated to at least the level of a Bachelor of Science degree (BSc) and in many cases had obtained a higher degree, Master of Science (7.0%), or Doctor of Philosophy (35.6%). The perceptions of employees are reported; it was beyond the scope of the research to examine the managerial views on reputation.     

Trends and determinants of managing virtual R&D teams

The past years have seen a decentralization of R&D to local markets and centres-of-excellence. Supported by modern information and communication technologies, 'virtual project teams' were formed to facilitate transnational innovation processes. With their boundaries expanding and shrinking flexibly with changing project necessities, virtual teams are believed to be an important element in future R&D organization. Based on 204 interviews with R&D directors and project managers in 37 technology-intensive multinational companies we identify four distinct forms of virtual team organizations used to execute R&D projects across multiple locations. Ordered by increasing degree of central project coordination, these four team concepts are based on: (1) decentralized self-organization, (2) a system integrator as a coordinator, (3) a core team as a system architect, and (4) a centralized venture team. Our contingency approach for organizing a transnational R&D project is based on four principal determinants: (1) the type of innovation (radical/incremental), (2) the systemic nature of the project (systemic/autonomous), (3) the mode of knowledge involved (tacit/explicit), and (4) the degree of resource bundling (complementary/redundant). According to our analysis, the success of virtual teams depends on the appropriate consideration of these determinants.     

A basic model for evaluating R&D performance: theory and application in Italy

Nowadays the public R&D laboratories have a fundamental role in countries' development, supporting businesses as they face the technological challenges in the turbulent world scenarios. Measuring the performance of R&D organisations is crucially important to decisions about the level and direction of public funding for research and development. This research considers the public laboratories like systems and develops a mathematical model based on the measurement of R&D activities with k‐indices. The score obtained from the research laboratories evaluation (relev) methodology synthesises in single value financial, scientific and technological aspects. It is an indicator, for R&D manager and policy maker, of performance in relation to other research organisations or in a time series. The method is an instrument of strategic planning and can be used for the improvement of individual activities and the overall performance of public R&D bodies.