On the road again: Researcher mobility inside the R&D network

Research Policy 34 (2005) 1350–1365

On the road again: Researcher mobility inside the R&D network Paola Criscuolo ∗ Tanaka Business School, Imperial College London, South Kensington Campus, London SW7 2AZ, UK Received 1 December 2004; accepted 1 May 2005 Available online 30 August 2005

Abstract This paper examines the roles of international assignments and other forms of researcher mobility inside the integrated R&D networks of six of the largest European pharmaceutical companies. From in-depth interviews with R&D managers and scientists it is found that, while the use of international assignments is both limited and often not aimed specifically at the transfer of knowledge, other forms of short-term mobility are widely employed. But what is transferred through such short-term visits is narrow in focus and often related to specific projects whereas international assignments enable the transfer of broader and more complex knowledge. The potential impact of these changes in the inter-unit mobility patterns of researchers may be to limit both the exploitation of potential synergies across disciplines and the creation of enduring and strong personal ties among researchers working in distant locations. © 2005 Elsevier B.V. All rights reserved. Keywords: Researcher mobility; R&D internationalisation; Multinational companies

1. Introduction In recent years, considerable evidence has been gathered that points to the increasing internationalisation of R&D activities by multinational enterprises (MNEs) (see, for example, Dalton et al., 1999; Le Bas and Sierra, 2002). As shown by a number of studies (Chiesa, 1996b; Gassmann and von Zedtwitz, 1999) this growth in R&D activities performed abroad is being accompanied by a transformation in the way ∗

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global R&D is organised, a transformation involving a transition from highly centralised structures to a less hierarchical ‘interdependent network of mutually supportive facilities’ (Pearce, 1999). However, very few studies have investigated the link between the internationalisation of R&D, on the one hand, and the degree of inter-firm researcher mobility, on the other (B´eret et al., 2003, is a notable exception). The successful adoption of an integrated network of R&D facilities rests on the ability of the MNE to leverage knowledge from pockets of excellence around the world and to exploit specialised assets within the organisation. The management of R&D staff

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thus becomes important, both as a means of achieving technology transfer among physically distant research facilities, and as a coordination mechanism for exploiting diversity among different R&D units (Edstr¨om and Galbraith, 1977). While there are a number of recent studies (for example, Almeida and Kogut, 1999; Rosenkopf and Almeida, 2003; Stolpe, 2002) showing that inter-firm researcher mobility facilitates the transfer of knowledge, especially tacit knowledge, through the creation and reinforcement of personal relationships, the role of researcher mobility as a means of achieving technology transfer within an organisation has been less analysed. As pointed out by B´eret et al. (2003), the human resource literature is mainly oriented to ‘top management’ or to questions of executive staffing practice and little attention has been paid to the management of R&D workers. Indeed firms have generally assumed that the scientific culture dominated the local culture and that interaction between foreign R&D units and the rest of the organisation was poor or nonexistent (Chiesa, 1996a). But, while in the traditional centralised R&D structure there was no need to stimulate network building among researchers because each centre was working in isolation with very little interaction with other units, this is essential in the integrated multi-hub R&D structure. The adoption of this organisational model in R&D requires a better understanding of the role of researchers’ mobility as a technology transfer and coordination mechanism. Thus, the aim of this paper is to fill the gap in the literature and to assess the degree, modality and role of researcher mobility in six of the largest European pharmaceutical MNEs. The paper is organised as follows. Section 2 discusses the theoretical framework. Section 3 describes the different phases of the drug discovery process. Section 4 outlines the methodology of the study. Section 5 describes the main distribution of the innovation activities and R&D organisation across geographically dispersed units. Section 6 reports the empirical findings on the role of researchers’ mobility. Section 7 concludes the paper.

2. R&D organisation and researchers’ mobility Traditionally the most strategic and ‘core’ innovative activities were concentrated in the central R&D unit in the home country of the MNE, while foreign

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sites were mainly responsible for supporting local manufacturing activities or for marketing activities. Mobility in this organisational model, dubbed the ‘ethnocentric’ (Perlmutter, 1965) or ‘centralised hub’ (Bartlett, 1986), was very limited because of the role and the size of the foreign R&D unit. In addition, foreign R&D centres did not provide interesting career opportunities for researchers coming from the home country unit because qualification requirements were often lower than in the central R&D laboratory (B´eret et al., 2003). In this model, there was only one centre and MNEs relied largely on one location, i.e. the home country, as the principal and almost the only source of their competitive advantage. However, particularly in R&Dintensive and technologically complex industries, innovation sources have become much more dispersed than in the past and in order to remain internationally competitive firms require access to foreign technological developments. MNEs cannot rely only on exploiting internationally those technological assets built on home-country competences, but have to source knowledge from each leading market and national technology system. As a result a different R&D organisational structure, where each R&D unit assumes a leading role in the creation of unique competences, has emerged. In this integrated R&D network structure, in the taxonomy of Gassmann and von Zedtwitz (1999), the creation of new technologies is not the prerogative of the centre, but rather takes place in foreign subsidiaries building on and exploiting host countries’ competitive advantage. However, if the main advantage of implementing a geographically dispersed R&D network structure is the ability to tap selectively into centres of excellence, the main drawback is the high costs of coordinating and achieving knowledge diffusion. Communication among different R&D units is crucial but at the same time it is also more complex than in the ‘centralised hub’ structure. In the integrated network model technological upgrading emerges from complex external and internal knowledge flows both between subsidiaries and from the centre to the periphery. Thus, the firm has to move away from the management of a set of dyadic relationships between the centre and the foreign R&D unit and adopt a more systemic coordination mechanism in order to promote intensive communication flows.

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If coordinating these exchanges of knowledge is complex, it is even more difficult to realise them. It is often argued that transfer of knowledge within units belonging to the same organisation is easier to achieve than is the transfer of knowledge between organisations (Grant, 1996; Kogut and Zander, 1992) and that the main competitive advantage of multinationals lies in the possibility of transferring and integrating knowledge generated by subsidiaries located in different countries. However, several authors have pointed out that knowledge transfer even within organisations is far from being an automatic process. There are barriers connected to the characteristics of the knowledge to be transferred, to the inter-unit technological, geographical and organisational distance, and also to the motivational disposition of both the sender and the receiver units (see Kogut and Zander, 1993; Szulanski, 1996; Gupta and Govindarajan, 2000). Although early MNE theories perceived knowledge as a public good (Buckley and Casson, 1976), it is now well accepted that there are codified and tacit forms of knowledge and that, while codified knowledge is revealed by its communication, and therefore is easily transferred, tacit knowledge is revealed through its application, implying that its diffusion is slow, costly and uncertain. Another barrier to internal knowledge transfer is inter-unit geographical distance. Early studies by Allen (1970, 1977) showed that physical proximity affects the likelihood of communication among R&D staff within technical functions and between technical functions and other functions in a firm. Although these problems have been mitigated by developments in information and communication technologies (ICT), which have facilitated the management and coordination of international research networks, geographical distance is still a barrier to the transfer of knowledge especially if it is tacit in nature (Howells, 1995). Organisational and cultural distance is another factor influencing the ease of intra-firm knowledge transfer (Bartlett and Ghoshal, 1989). The adoption of a geographically distributed R&D organisation implies the existence of a strong cultural heterogeneity, which creates barriers to knowledge sharing. The lack of a common culture and greater autonomy may introduce motivational barriers in the subsidiary to transfer technology within the organisation. The motivational element can be particularly important in determining

knowledge transfer from units that have been recently acquired, although with time this effect should fade way. A further obstacle is inter-unit technological distance. This problem is especially relevant for those companies that have adopted a differentiated R&D network, whereby subsidiaries have a set of unique capabilities reflecting the host country’s technological specialisation. Knowledge sharing requires that sender and the receiver have a common set of prior knowledge. The increased level of technological specialisation and diversification in the R&D organisational network may reduce the amount of shared knowledge hindering the process of knowledge transfer. In this organisational structure characterised by inter-unit geographical, organisational and technological distance inter-unit researcher mobility could facilitate knowledge diffusion and coordination of R&D activities. Traditionally the human resource literature has identified three reasons for transferring personnel, mainly managers, to other units (see, for example, Edstr¨om and Galbraith, 1977; Harzing, 2000). First, transfers are made to fill positions when there is a perceived lack of availability of qualified individuals in a foreign country, i.e. to transfer knowledge. Second, international assignments are used for personal development, i.e. to give a manager the opportunity to gain international experience in the managing of the organisation. Third, transfers are used for organisational development. In this case international assignments are employed as a control and coordination mechanism. This strategy consists of two elements: socialisation of both expatriate and local managers into the corporate culture on the one hand, and, on the other, the creation of informal communication networks and personal relationships that can provide links between the subsidiary and the headquarters. More recently, it has been shown that coordination by socialisation is also conducive to increasing knowledge flows within the MNE (Gupta and Govindarajan, 2000). From a knowledge sharing perspective the underlying rationale is that the more that different units share similar goals, the more likely they are to transfer resources and exchange complementary knowledge.1

1 Hedlund (1986) himself recognised the importance of human resource management in the ‘heterarchical’ model: ‘In order for

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In the area of R&D, transfers of personnel are particularly crucial because they allow face-to-face interaction through which less codified forms of knowledge can be shared. Although ICT applications such as email, videoconferencing, instant messaging and groupware have enabled the implementation of virtual teams, face-to-face communication is still considered one of the ‘richest’ forms of communication (Daft and Lengel, 1986). Face-to-face interaction appears to solve problems and complete tasks faster than electronic communication (see, for example, Desanctis and Monge, 1999) because it allows the transmission of multiple clues (i.e. eye contact, head nods and tone of voice) and immediate feedback. As shown by Orlikowski’s (2002) study of a global product development team, face-to face interactions play a crucial role in transferring complex knowledge as well as building trust, commitment, and establishing and sustaining social relationships. This point is also emphasised by recent studies on the social dimension of R&D spillovers (Breschi and Lissoni, 2003; Singh, 2004; Stolpe, 2002). These contributions have shown that inter-firm researcher mobility is very important in explaining the occurrence of knowledge spillovers through the formation of social ties between researchers who have worked together in the past. These social relationships allow the sharing of information among researchers even when they are no longer part of the same organisation. Notwithstanding the fundamental strategic role of inter-unit researcher mobility in efficiently exploiting knowledge within the geographically dispersed R&D network, little is known about the use of this technology transfer and coordination mechanism. The human resource literature has mainly focused on the mobility of managers, while the international business literature has not explicitly analysed this mechanism although it has acknowledged its strategic role in both the coordination of R&D activities and in the internal knowledge transfer process (Bartlett and Ghoshal, 1990; Casson and Singh, 1993; Chiesa and Manzini, 1996; De Meyer, 1993; De Meyer and Mizushima, 1989; internalisation of norms to take place, a lot of rotation of personnel and international travel and postings are necessary . . .. Advances in information technology may help the formation of the nervous system of the firm, but this will not be enough for building internal cultures’ (p. 29, emphasis added).

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Persaud et al., 2001; Teigland et al., 2000; Westney, 1993). This paper, therefore, tries to fill the gap in the literature and report new evidence on three aspects. First it will assess what the degree of mobility of researchers inside the R&D network is and what types of assignments are used. A number of recent studies within the human resource literature have shown that there is an increasing trend in the use of short-term assignments and other alternatives to long-term assignments (such as international commuting and ‘frequent flying’) to contain the cost of relocating staff abroad and partly to overcome immobility of dual-career couples (Harris, 2002; PricewaterhouseCoopers, 1999; Roberts et al., 1998; Welch et al., 2003).2 Second, it will examine the reasons for transferring researchers to other units. Third, it will analyse what the impact of researcher mobility is on the internal knowledge diffusion process.

3. Research and development in the pharmaceutical industry This section summarises the major phases of the drug discovery process. It explains what types of activities are undertaken in different units of the R&D network and the industry trend towards a common multi-hub network structure in research. The drug discovery and development process can be divided in to six stages (see Fig. 1). The first three stages comprise the drug discovery phase, which aims to identify new compounds; the remainder of the process comprises the development phase, when compounds are tested to assess their efficacy and tolerability. The division between research and development is not clear-cut and certain companies classify as research part of the clinical development up to the proof of concept, i.e. when the compound can be demonstrated to be operating by the desired mechanism. 2 Harris (2002) gives the following taxonomy of international assignments: long-term assignments involve the relocation of the family for a period over 1 year; short-term assignments last for less than 1 year and do not always require the relocation of the family; international commuting entails commuting from the home to the host country on a weekly or bi-weekly basis, while the family remains at home; frequent-flyer assignment refers to those forms of assignments where the employee undertakes frequent international trips but does not relocate.

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Fig. 1. The drug discovery process.

Developments in the technologies employed in the drug discovery phase and scientific advances in cell biology, pharmacology and enzymology have fundamentally changed the nature of the research process in the pharmaceutical industry (Arora and Gambardella, 1994; Henderson and Cockburn, 1994; Nightingale, 2000; Reiss and Hinze, 2000). Traditionally, the discovery of a new compound was the result of a trial-anderror process during which thousands of compounds were screened in order to find one with a specific biological profile, because in general the ‘mechanism of action’ of a compound was not clearly understood. This process required huge laboratories to conduct large-scale screening, and extensive financial, human and technological resources. Since the 1990s, the introduction of what are known as enabling technologies, such as high-throughput screening, combinatorial chemistry, bio-informatics and scientific advances in biomedical sciences have completely

transformed the experimental design and the drug discovery process. The discovery of a drug is now the result of a science-deductive method and researchers know which biochemical and molecular pathways they want to block or stimulate, and are aware of the basic features of the molecules that might serve this purpose.3 Advances in biomedical knowledge have helped decouple the competencies that underlie drug discovery from drug development. Since the knowledge and 3 The initial optimistic expectations about the impact of the adoption of new technologies on the drug discovery process have been challenged by some more recent evidence on the decline in productivity in drug discovery (see Nightingale and Martin, 2004 and the literature cited therein). Part of the reason for this decline in productivity is that the introduction of new methods such as high-throughput screening, combinatorial chemistry, and genomics have generated a range of new problems connected with information overload and statistical quality control.

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expertise that are critical to drug discovery can be easily codified and partitioned, it is not longer the case that discovery and development activities are more effectively performed together. As shown by Chiesa (1996c) there has been a tendency towards physical separation between development and research functions and a reduction in size of research units. However, the development of a drug still requires large amounts of human and financial resources and its efficiency relies on the achievement of a critical mass to carry out highly standardised large-scale activities.

4. Research method The exploratory nature of the questions addressed in this paper makes a case study approach based on data collection the most appropriate research strategy. Data were collected through 24 face-to-face semi-structured interviews with R&D managers and scientists in six of the largest European pharmaceutical companies (some descriptive statistics of the interviewed companies are reported in Table 1). Heads of global R&D function were contacted with a request to interview both R&D managers and scientists seconded for a minimum period of 6 months to one of the US R&D facilities. This paper is based on their experience, the impact that this international assignment has had on their career and on their innovative activity, and thus is not a representative sample. It was decided to focus on secondments to the US because, as will be shown in the next section, these MNEs carry out a large proportion of their R&D activities in this country in order to acquire specialised capabilities particularly in biotechnology (Allansdottir

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et al., 2002; Reger, 2000; Senker, 1998; Shan and Song, 1997; Sharp, 1999). Between two and six interviews of 1.5 h each were carried out in each company between June 2002 and April 2003. The interviews were based on two separate but overlapping sets of questions for the managers and the scientists. This enabled results to be corroborated that might otherwise be biased depending on the position of the individuals within the organisation. But it should be noted that, since the interviews were only carried out in the headquarters of the company, they may reflect only the perceptions of the central organisation. The questions addressed to the researchers focused on the knowledge sources involved in their research activity and the degree of interaction with other scientists; on the reasons for being seconded overseas; on the knowledge exchange and accumulation during the assignment; and on the applicability of the knowledge learned abroad. The interviews with the R&D managers covered three themes: the R&D organisation structure; the use of socialisation mechanisms in the internal knowledge transfer process; and the rationale behind the use of international assignments. The general method used to analyse the data gathered in the interviews is based on a procedure described by Glaser and Strauss (1967) as ‘constant comparison method’. Since the analysis aims to provide a description of the role of researcher mobility as a coordination and technology transfer mechanism, this method was used not as a way to derive theory but mainly as a way to examine the data. The first stage included ‘coding’ the interview material. This involved devising codes or subheadings to link the raw data fragments such as paragraphs, phrases or sentences from the interviews,

Table 1 Description of the interviewed companies Company name

Corporate headquarters

2002 Pharmaceutical revenues ($)

Rank

No. of employees in R&Da

2002 R&D expenditure ($)a

AstraZeneca Aventis GlaxoSmithKline Novartis Roche Schering

London Strasburg London Basel Basel Berlin

17,841 16,639 27,060 13,547 9,355 3,074

4 6 2 8 13 19

11,000 5,600 15,000 3,000 5,030 1,200

3,069 3,235 4,108 2,799 2,746 869

Rank 4 5 2 6 7 19

No. of interviews conducted 5 4 5 2 3 5

Source: Revenues, R&D expenditures and ranking data are from the Contract Pharma Ranking of top 20 pharmaceutical companies (www.contractpharma.com). a Not all R&D employees and expenditure are in the pharmaceutical business of these companies.

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to pieces of text relevant to a particular theme. All interviews were taped and transcribed and then passages of text were grouped into patterns according to the codes they had been assigned. The identification of codes was based on the research questions concerning the role of international assignments inside the R&D network. Constant comparison was used to evaluate the data to determine the similarities and differences among them and to identify the concepts and categories that they represented. Through constant comparison of the findings from within-firm and across-firm analyses the core categories, including themes, concepts and possibly relationships between variables, began to emerge. This process was repeated until the conceptual categories were saturated, i.e. when no additional data could develop the properties of a category any further. Finally, the findings were reported back to the interviewed companies and their feedback were sought to correct erroneous interpretations.

5. The integrated R&D network and its managerial challenges Before turning to the findings on the role of researcher mobility in the internal transfer of knowledge, a description of the specific R&D organisational structures encountered is needed. Different international R&D structures entail very different knowledge transfer efforts and different levels of integration among geographically dispersed units. As can be seen from Table 2, overseas R&D centres are actively engaged in drug discovery activities in one or more therapeutic areas. Although all the companies in the sample have an R&D presence in several continents, the actual distribution of research phases varies across companies. In particular they have chosen different points of the drug discovery process on which to centralise resources to achieve economies of scales and on which to decentralise to achieve specialisation. Since the merger of Glaxo Welcome and Smith Kline Beecham in 2000, the early phase of Glaxo–Smith Kline’s discovery process has become a global function located in the UK, US, Italy and Spain, although 90% of the activity is concentrated in research sites in the US and the UK. Once molecules have been identified and optimised they are passed over to the

Centres of Excellence of Drug Discovery (CEDDs), which are aligned by therapeutic areas; chemists and biologists, expert in the disease in question, can work closely to bring the compound to the proof of concept phase. According to an R&D manager the CEDDs are ‘almost set up like independent operations if they were small biotechnology companies’. They compete for the resources that are distributed according to how close their molecules are to the market and how well they have performed. Once the compound has reached the proof of concept stage, it is transferred to other global functions that might be located elsewhere, to be further developed. In Aventis, there are three drug-discovery sites that are set up as entrepreneurial units and compete on a global basis for resources. Each site has responsibilities from the early phase of a project up to the proof of concept phase, but the project team gets support from the so-called global functions of: (1) lead generation, which provides support for genomics and high-throughput screening technologies and chemical libraries; (2) lead optimisation, which provides support for drug metabolism, pharmacokinetics, drug safety, clinical discovery, human pharmacology and laboratory animal and welfare. There is a Global Drug Development centre in Bridgewater (US), from where all clinical development activities subsequent to the proof of concept stage are coordinated. Clinical trials are carried out all over the world, monitored by regional development centres in Paris for Europe, in Tokyo for Japan, in Bridgewater for the US. This R&D organisation has been in place since the creation of Aventis, which resulted from the merger of Hoechst and RhˆonePoulenc in 2000. In Schering since 2001 there have been five Research Business Areas (in vivo diagnostic, neurology/immunology/cardiovascular, dermatology, gender health care and oncology), which are attached to three research sites. The target identification phase is carried out in all three locations, but the studies of lead identification and lead optimisation are only undertaken in Berlin and Richmond. The activity of each research site is supported by three regional research centres in Europe, Japan and the US. In Novartis and Roche, each research site performs all the phases of the drug discovery process up to the pre-clinical stage. The compound is further developed in Basel and in the US. In AstraZeneca each site is a fully fledged

Table 2 Geographical distribution of R&D centres and their specialisation Previously part of

Company

Therapeutic areas

Astra Zeneca

Zeneca Zeneca Astra Astra Astra Astra Zeneca New

Alderley, UK Charnwood, UK M¨olndal, Sweden Gothenburg, Sweden S¨odert¨alje, Sweden Lund, Sweden Wilmington, Delaware, USA Boston, USA

Infection, oncology, inflammation Respiratory, inflammation Neurology, respiratory diseases, inflammation Cardiovascular, gastrointestinal Pain control, central nervous system Respiratory Central nervous system Oncology, infection

Hoechst

Bridgewater, New Jersey, USA

Rhˆone-Poulenc Hoechst

Paris, France Frankfurt, Germany

Respiratory diseases, rheumatoid arthritis, central nervous system, immunology Alzheimer’s and Parkinson’s diseases, infectious diseases, oncology Cardiovascular diseases, metabolic diseases, osteo-arthritis

Smith Kline Beecham Glaxo Welcome

Cardiovascular, urogenital, microbial, oncology Metabolic and antiviral

Glaxo Welcome Glaxo Welcome

Upper Merion, Philadelphia, USA Research Triangle Park, North Carolina, USA Stevenage, UK Verona, Italy

Sandoz New Sandoz (since 1964) Sandoz Sandoz and Ciba-Geigy

Tsukuba, Japan Cambridge, Massachusetts, USA East Hanover, New Jersey, USA Vienna, Austria Basel, Switzerland

Ciba-Geigy

Horsham, UK

Oncology, arthritis Cardiovascular diseases, metabolism, infectious diseases Oncology, arthritis, functional genomic Dermatology, immunology Nervous system, transplantation, oncology, arthritis/bone, functional genomic, ophthalmic Respiratory, chronic pain

Acquired in 1994

Palo Alto, California, USA

Aventisa

GSK

Novartis

Rocheb

Nutley, New Jersey, USA Basel, Switzerland Penzberg, Germany Richmond, California, USA Berlin, Germany

Schering Acquired in 2000

Mobara, Japan

Neurology, respiratory diseases, inflammation Psychiatry, neurology

Central nervous system, inflammatory diseases/bone, genitourinary diseases, viral diseases Metabolic disorders, oncology, vascular diseases Metabolic disorders, central nervous system, vascular diseases Oncology

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Company

Neurology, immunology, cardiovascular, oncology In vivo diagnostic, radio pharmaceuticals, neurology, immunology, cardiovascular, dermatology, gender health care, oncology Oncology, neurology

a

At the time of the interviews Aventis and Sanofi were still two separate companies. Although Roche has financial control over Genentech, this company cannot be considered as a Roche subsidiary. So far, Roche has an ‘opt-in right’ for co-developing compounds discovered by Genentech from phase 2 or 3 of clinical development. b

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R&D facility engaged in activities which range from early discovery to life-cycle management in a particular therapeutic area. More than one R&D unit is normally involved in different phases of the drug discovery process supported by centres of excellence in enabling technologies. Using the taxonomy proposed by Gassmann and von Zedtwitz (1999), it can be seen that drug discovery is organised as an integrated-network structure. In each location a critical mass of scientists and technicians specialised in a set of targets for a disease area are brought together, facilitating personal interaction and the exchange of tacit knowledge. The activity of each centre is supervised by a central research unit, which could either be in the home country or in the US (as, for example, in Aventis and Novartis), to avoid duplication and favour knowledge integration. As pointed out by Ramirez (2003), the organisation of research activities according to therapeutic areas has been made possible by the new heuristic in drug discovery that has allowed scientists to focus on specific groups of targets in particular centres of expertise. This international division of labour enables the firm to access multiple external knowledge sources from centres of excellence around the world and/or internal knowledge sources from research units with a strong technological background within the organisation. Centres of excellence for a particular enabling technology (such as genomics, highthroughput screening, combinatorial chemistry and bio-informatics) support the activity of these research units. The drug development process appears, however, to be organised as a polycentric decentralised structure, in Gassmann and von Zedtwitz’s (1999) taxonomy. This structure is characterised by a geographically dispersed network of autonomous units with their own assets and capabilities, which allows them to respond to local demands and opportunities. Development activities are indeed concentrated in a few locations in order to achieve critical mass and economies of scale and tend to be located in both the home country and the US to be near the largest markets and the regulatory authorities. These units usually confine themselves to developing the results from research units located in the same region and are coordinated by a global development centre (for example, Bridgewater for Aventis). The degree of interaction among the development centres is not as intense as among the research network

although they frequently carry out studies for other development centres whenever these have problems of insufficient capacity.

6. The role of international assignements and other forms of mobility The existing organisation of research activities in pharmaceuticals is, therefore, quite complex and involves a high degree of communication among geographically dispersed research centres that try to operate in an integrated way during the drug discovery process. A particular project will be handed-over from one laboratory to another as it progresses through the different phases of the drug discovery and development process. Thus, results from the drug discovery process must be transferred to the units carrying out development activities. Moreover, knowledge acquired in a particular therapeutic area also needs to be transmitted not only to other units working in the same area but also to other centres working in different therapeutic areas where it could be employed. The management and functioning of this complex organisation relies heavily on ICT applications such as intranets, portals, project websites, internal databases of compounds, videoconferencing and email. However, face-to-face interaction is important not only for transferring less codified forms of knowledge but also for building the necessary trust, and thus generating knowledge sharing through electronic communication. As one scientist noted: ‘We coordinate our work through phone calls, emails, but personal contact is crucial; you need to sit together and you can work much better together if you have built a personal relationship which is necessary for building trust . . . the flow of information happens when there is trust’. Given the apparent importance of face-to-face interaction and the creation of personal relationships it seems natural to investigate what use is made of international assignments of researchers. Table 3 shows the characteristics of the interviewed researchers and the main purposes behind their international assignments. Some important findings should be noted. First, the majority of researchers were seconded for a period of

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Table 3 Interviewee profile and international assignment characteristics Job description

Major activity

R&D function

Assignment Period

Main purpose of assignment

Proposed by

Research chemist Medicinal chemist

Search for new compounds Synthesis of compounds

Discovery Discovery

6 months 1 year

Management Scientist

Medicinal chemist Senior scientist

Combinatorial chemistry Development of high-throughput screening technology Synthesis of compounds Toxicology studies

Discovery Discovery

6 months 1 year

Personal development Organisational development Knowledge acquisition Knowledge transfer

Discovery Development

6 months 1 year

Development

Senior scientist Toxicologist Product line extension manager Bio-analyst Genomics researcher Bio-informatics researcher Clinical pharmacologist

Head of therapeutic area

Creation of new formulations and products from existing drugs Measurement of drug metabolism in the plasma Analysis of gene-expression data Modelling and simulation of biological processes Analysis of how the drug works in the human body and how the body reacts to the drug Development of new compounds

Scientist Scientist

6 months

Personal development Organisational development Personal development

Scientist

Development

3 years

Knowledge transfer

Management

Discovery

6 months

Knowledge acquisition

Management

Discovery

10 months

Knowledge transfer

Management

Development

5 years

Knowledge transfer

Management

Discovery

2 years

Knowledge acquisition

Management

6 months or 1 year, which seems in line with the overall trend in the international mobility of the work force in MNEs mentioned in Section 2. Second, although the most common reason is to transfer or acquire knowledge, international assignments of researchers are also used for personal and organisational development.4 Third, even though international assignments appear to be more frequently employed in the drug discovery process, which reflects the higher level of integration and interaction among the research units, they are also used in the drug development process. Finally, these secondments can either be imposed by the management or they can be proposed by the scientist because he/she considers the experience to be a useful part of his/her personal development. 4 Even though experience abroad is not articulated as a requirement for advancement within the company and no promise of promotion is made before the assignment, researchers know that gaining experience on how R&D activities are organised in another facility is very beneficial to their careers.

Scientist Scientist

But beyond these general trends it is also useful to look one-by-one at the individual assignments described in Table 3. One scientist spent 6 months in the US as a visiting scientist in a dedicated bio-informatics group formed as a result of a joint venture with an American company. This assignment was aimed at acquiring new technological expertise in the field of genomics that was missing in the European R&D facility and was needed to undertake gene-chip experiments in the European site. Similarly, another senior scientist went for 1 year to a US research facility to implement a new high-throughput screening technology, which had been developed in the home country laboratory. The company believed that the relocation of the key scientist involved in the development of the new equipment would not only facilitate the transfer of technical knowledge but would also avoid the ‘not invented here’ syndrome (Katz and Allen, 1982). In another company, sabbatical visits were used for transferring expertise in combinatorial chemistry and automation technologies from one site to another.

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However, this socialisation mechanism is perceived not only as a way for channelling transfers of knowledge but also as a way of improving relations between R&D locations, and thus it is used as a coordination mechanism. This emerges very clearly from the following quote: ‘Historically, communication and cooperation between European and US sites has been difficult due to the different research philosophies. During the mid 1990s there was more competition than cooperation with them. During that time it was even difficult to exchange knowledge. To overcome cultural differences and to increase a common understanding among colleagues from different continents staff exchange programs have been established. Now, after the first exchange of staff, things are improving . . . People taking part in the exchange programme should be the bridge between the two sites. It is important to know people, it is much easier to deal with them if you have worked with them’ (emphasis added). Similarly in another company a scientist said: ‘The R&D facility where I went was part of a company we just acquired the year before and people there were not very happy about this unfriendly take over. One of the purposes of this exchange was to overcome the initial reservation and try to build a collaboration that would make us colleagues rather than competitors’. In all instances, this experience enabled researchers to have better interaction and communication with the people they met in the other facility. Interaction with colleagues inside the company appeared to be the most important source of learning, while very little interaction seemed to have taken place between the seconded researchers and other host country firms, universities, or scientists. This finding confirms that the main purpose of these assignments is network building among researchers working in geographical distant R&D centres and increasing awareness of ‘who knows what’ in other centres. These relationships are in most cases maintained once the scientist has returned to his/her home laboratory. As stated by one researcher: ‘This experience made me knowing people to whom I have been in touch later on my job, once back in

Europe. I got a better understanding of the technology they were using in the US and I was also able to record the ‘contact’ people in the US subsidiary’. Researchers who had been on secondment seemed to have also gained a better understanding of the R&D organisation and management adopted in the US centre and this appears to be one of the primary goals attributed to this type of socialisation mechanism by the top management of the companies. According to the head of a therapeutic area: ‘For me, in terms of delivering projects globally, it is important that people [when sent to another R&D centre] understand what it takes to deliver things in a different country and how to do it most effectively. When these people go back to their original site they actually strengthen the site they came from because they know how this organisation works globally rather than knowing only how it works based on what they have seen in one site’ . . . ‘when you send someone in another R&D site you have to make sure that [the international assignment] is seen as a family thing not an individual thing’ (emphasis added). Thus, while scientists perceive the foreign experience as a chance to broaden their knowledge and acquire new skills, top management see it as an opportunity to increase the productivity of the company by getting the researchers acquainted with how the R&D function is managed in other facilities. However, even though firms acknowledge the crucial role of scientists in the international diffusion of knowledge and rely heavily on the ability and private initiative of individual scientists to span the boundaries of their own area of specialisation and interact with other scientists, the use of international assignments is very limited. Across all firms in 2003 only 1% of the R&D staff employed was on secondment to another unit in the same company for a period longer than 6 months and secondments are generally organised only when needed. Only in one division of one particular company is there an organised exchange programme where a scientist from the European division spends 1 year in the US facility while a scientist from the US replaces her/him at the European site. This programme has only been in place for the past 2 years and is an attempt at replacing the less popular

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‘sabbatical option’, where a scientist goes to a foreign R&D laboratory but is not replaced by another scientist. However, this low degree of long-term mobility is accompanied by a high degree of short-term mobility associated with the implementation of cross-border projects and/or temporary assignments (from 1 week to 6 months) for the transfer of specific expertise. As observed by an R&D manager: ‘because people travel more often for weekly periods, there is less need to send them for longer periods’. Cross-border projects are widely used because of the organisational structure of the R&D activities, which often requires researchers from different locations at different stages of the drug discovery project. They also aim to replace long-term secondments of researchers. As explained by an R&D manager: ‘Resources are managed globally but people stay at the site. For example imagine you have a diabetes project in the European site where the expertise is and you need chemical expertises. It might happen that the chemist is working in the US facility. Typically you do not need to move the chemist from the US to Europe because you just include this particular chemist in the research team’. These international project teams allow individuals from distant locations and from different cultural and technological background to be brought together regularly. However, cross-border team projects are seen more as an unavoidable consequence of the R&D organisation than as a strategic means for increasing knowledge diffusion inside the geographically dispersed R&D network. This clearly emerges from the comments of an R&D manager: ‘The one-location team is the preferable model because it is the more efficient, but the reality of our organisation is that most of our teams have members based in at least two countries and some of them three. My personal view is that if you can have one location team you are going to be better off, if you can have all sitting in one corridor is going to work better. But this is the exception to the rule’. Temporary assignments and short visits are also quite often employed and they are easy to organize and do not require senior manager authorization.

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‘People will travel quite easily to have face-to-face meetings. It is quite easy to bring someone over from another facility. For example we had a resource shortfall in the headquarters and we brought two people with that particular skill from North America to work here for three weeks. We do this quite often. It is resource driven process, not part of individual personal development’. This type of short-term assignment is not only adopted when there is a shortfall of resources but is also employed for transferring specific expertise as is the case when a project passes from the discovery to the development phase. At this stage of the drug discovery process researchers from the development function will work closely with the discovery team from 3 to 6 months before the compound has been identified. Another way of bringing together people from across the organisation with similar expertise is through seminars on specific scientific and technology areas. In only one company is there an annual international research meeting where all the researchers present their work. This type of event does not take place in other companies because of the size of the R&D organisation and it has been replaced by smaller workshops focused on a particular discipline. Similarly, companies promote and officially support communities of practice (Wenger, 1998) and technology interest groups. These communities are formed by people with expertise in a target family, such as kinesis or protease, or in a discipline such as molecular biology, chemistry, pharmacology. The task of this group of experts is to integrate and diffuse knowledge across different locations and therapeutic areas.5 The members of these communities interact regularly through intranet, meetings and formal workshops. Technology councils are set up to discuss problems faced in using particular technologies, such as those used in combinatorial chemistry or high-throughput screening. These councils provide a forum where individuals can share best practice and some of the challenges they face in using a particular technology. Another organisational measure adopted by one company to gather people from different therapeutic areas and locations is cross-disciplinary project proposal review boards. 5 They are also supposed to span outside the firm’s boundaries and follow the developments of their scientific fields outside the firm.

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Thus, in line with what is found by B´eret et al. (2003) and with the general trend in international labour mobility in MNEs, the adoption of an integrated R&D network has lead to an increase in researchers’ mobility but in the form of short-term visits which are either connected to cross-border projects or organised for transferring specific skills. The general impression from the interviews with R&D managers is that the use of long-term mobility has declined and is now very limited. Secondments abroad were more often employed in the past when each centre was organised as a completely self-sufficient R&D unit specialised in certain therapeutic areas where most of the phases of the drug discovery and development process were carried out. Because all the R&D staff from research to development were in one place, there was less short-term researcher mobility and cross-border team projects were almost never implemented. Longterm international assignments of researchers instead were employed more often than in the current organisation model as a mechanism for transferring complex and location-specific knowledge. There are two main factors explaining this low level of long-term mobility of researchers in the form of international assignments. First, it is very expensive to send someone to another facility (according to an R&D manager it doubles the cost of employment) and the scientists themselves are reluctant, perhaps more so than before, to leave lifestyles behind to take on assignments abroad. Second, the R&D organisational structure itself hampers long-term researcher mobility, a point emphasised also by B´eret et al. (2003). The high-degree of technological distance between research sites implies that competences are not easily transferable from one site to another, making mobility difficult. As acknowledged by an R&D manager, scientists do not move among different R&D units, because the expertise they have is often on a specific therapeutic area that cannot be applied in other research contexts. This emerged very clearly from interviews with those seconded researchers whose primary purpose was not to transfer specific knowledge to the foreign R&D unit. ‘When I was in the US I developed a completely new class of drugs. I wanted to work more on that class of compounds, but I did not, because it would have meant implementing here a different program’.

‘I was not able to apply much of what I have learnt in the US because we use a different approach’. However, it is possible to identify a longer-term potential for cross-fertilisation arising from exchanges of personnel. ‘Coming from traditional medicinal chemistry it was my first chance to get in touch with automated chemistry. After staying three months in the automated chemistry group in our US subsidiary I was aware of the scope and limitations of the approach which helped a lot in contributing to a global technology strategy’. ‘While I was in the US I had started a collaboration with a company expert in gene-chip technology. This experience improved my innovation activity because we are trying to work more and more in my field with these micro-areas and this time in the US was a trigger for me to think very hard on how I could use these tools’.

7. Conclusion This paper has analysed the roles of international assignments and other forms of inter-unit researcher mobility in six of the largest European pharmaceutical MNEs as a coordination and technology transfer mechanism. In these companies the innovative efforts in the drug discovery phase are carried out in an integrated network structure characterised by inter-unit geographical, technological and organisational distance, which could hinder knowledge sharing and coordination of the R&D activities. In this organisational structure international assignments are used to achieve three main goals. First, researchers are seconded to other R&D units to transfer technical knowledge from the headquarters or to acquire technical knowledge from other research facilities. Second, international assignments are used for individual leadership development. Third, assigning researchers to other R&D units is employed as a coordination mechanism, i.e. as a means of reducing organisational distance through social interaction among researchers. The secondment experience appears to increase researchers’ overall understanding of R&D organisation and management in the other unit, helping them to identify ‘who knows what’, and fostering the creation of personal

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relationships with other researchers. Thus, researcher mobility seems to help overcoming some of the barriers to knowledge sharing inside the R&D network and fully exploiting the benefits of this organisational form. However, it was found that long-term international assignments are not widely used even though companies rely heavily on the initiative of individual researchers to interact with other colleagues and to enhance R&D synergies across projects. They have been replaced by other, short-term forms of mobility which are less costly and do not require the relocation of the family. Researchers from different R&D centres meet each other quite regularly either because there are involved in cross-border team projects or because they participate in a technology interest group. Shortterm assignments are also used for transferring specific expertise to other R&D facilities or for solving problems of critical-skill shortages. This paper has provided some indicative evidence on the frequency and purpose of inter-unit researcher mobility but further and more systematic research is needed. One issue to be addressed is whether the shift towards repeated short-term visits is less conducive to the formation of enduring and strong social relationships among researchers than longer term assignments. Building these social relationships is important not only for transferring knowledge but also for reducing inter-unit attrition and improving cooperation between research facilities. A second issue relates to the impact that these changes in the duration of international secondments have on the internal transfer of knowledge firms’ innovative performance. It was found that shortterm assignments are mainly aimed at transferring project and/or task-related knowledge; thus, one wonders whether they allow any opportunity for identifying potential synergies across research areas. Short-term visits may hinder serendipity in drug discovery, on the one hand, and cross-fertilisation of knowledge within and across therapeutic areas – and thus innovative performance – on the other. As argued by Henderson and Cockburn (1994, 1996), both are becoming crucial for discovering new drugs. Thanks to the adoption of the new science-deductive method the search for new compounds is now being shaped by knowledge of the fundamental physiological mechanisms, and therefore knowledge acquired in one therapeutic area can lead to advances in other areas. Similarly

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Hollingsworth’s work (2005) shows that major discoveries in biomedical research occur in organisations characterised by a high degree of interdisciplinary and integrated activity across diverse disciplines. One can imagine a number of ways to explore these research questions. One of them could be looking at the performance of individual scientists and their social networks and relate them to their intra-firm mobility patterns. Results from such an investigation could be of great interest for the management of R&D organisations. If scientists with a long-term secondment experience are more likely to make major breakthroughs because they are more interdisciplinary, then R&D managers should invest more resources in putting scientists on the road.

Acknowledgements The author would like to acknowledge the financial support received by the European Commission (Marie Curie Fellowship) and to thank Stefano Brusoni, Rajneesh Narula, Lionel Nesta, Andrea Prencipe, Matias Ramirez, Fergal Shortall, Ammon Salter, Ed Steinmueller, two anonymous referees, and participants at the conference in honour of Keith Pavitt and at the EIBA conference for helpful comments and suggestions.

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