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R&D globalization and international business
Journal of International Management 10 (2004) 1 – 3
Editorial
R&D globalization and international business Over the last decade, global work has emerged as a new business paradigm. Bridging distance, culture and time, progressive corporations of the new economy have embarked on a relentless quest for global dominance. A quest for generating and enhancing business value and sustained market competitiveness has lead many corporations to embrace a globalization strategy. To achieve competitive edge and offer superior value propositions to their stakeholders, many technology-based businesses have launched an irreversible initiative for R&D globalization. There are several factors accelerating this trend: access to talented resource pool in other countries, competitive cost structures, proximity to markets and customers, economic liberalization, and mergers and acquisitions. Although it has been some time since companies have experimented with R&D globalization, effective organization and management of global R&D still remains an area corporations are struggling to deal with successfully. Lack of a robust R&D globalization strategy coupled with issues relating to communication and coordination, cultural diversity and technology infrastructure are some of the key factors impacting success. In addition, country-specific policies and economic conditions also have an influence on the success of global R&D. Much of the published literature on R&D globalization concerns economics of globalization and the associated political dimensions. However, adequate work has not been published on the management and organizational aspects of R&D globalization. With the intensification of competition, R&D globalization is fast becoming a competitive necessity for science and technology-based businesses. New and sound approaches are, therefore, warranted to tackle the strategic and operational aspects pertaining to R&D globalization. Effective organization and management of global R&D requires careful considerations on several fronts:
Why globalization of R&D will deliver competitive advantage to the firm? How will the firm derive cost, quality and cycle time advantages through R&D globalization? What aspects of the firm’s R&D should be globalized? What should be firm’s R&D globalization strategy? How the global R&D will be organized? What location(s) will be most appropriate for establishing the global R&D sites? How work will be allocated across the dispersed R&D locations?
1075-4253/$ - see front matter D 2004 Elsevier B.V. All rights reserved. doi:10.1016/j.intman.2003.12.001
2
Editorial
How will the firm address the issues pertaining to distance, cultural diversity, and time zone differences? What communication and coordination mechanisms will be employed? How the new R&D location will be staffed? How will the competencies of a new R&D location be grown and integrated with the firms overall competencies? What is the optimal size of the new R&D location during its start-up and steady-state phase? How the human resources management tasks such as career management and performance management will be handled? How the geographically distributed knowledge and competencies will be managed and leveraged for firm’s competitive advantage?
A good R&D globalization approach would seek to satisfactorily address all the above areas vital for success. Several scholars have made noteworthy contributions towards effective planning, organization and execution of global R&D organizations. While de Meyer and Mizushima (1989) attempted to provide an integrated approach to global R&D management, Boutellier et al. (2000) provided the first comprehensive and contemporary account of global R&D. Important contributions relating to strategy and organizational approaches in global R&D have been reported by Gerybadze and Reger (1999), Gassmann and von Zedtwitz (1999) and Chiesa (1996). An interesting study with significant practical implications concerning market versus technology drivers in the internationalization of R&D has been put forth by Von Zedtwitz and Gassmann (2002). The choice of location for a global R&D site merits a careful consideration as also the selection of the site leader and determination of the optimal size of the new site. In this regard, Kuemmerle’s (1997) work is noteworthy, which also discusses approaches to establishing new R&D sites. With R&D globalization, corporations actually establish a 24hour innovation factory, and managing knowledge and intellectual assets in such dispersed set-ups holds a phenomenal challenge. Though much investigation needs to be done in this area, the work done by Teigland et al. (2000/2001) offers good pointers. Much research needs to be done, though, to understand and successfully address the various nuances involved in global R&D. The purpose of this special issue is to present the state-of-the-art research on R&D globalization and international business, especially when R&D globalization is assuming a complex form. Although the special issue contains only three papers, I believe these make significant contributions not only to the body of literature on R&D globalization but also to the practical aspects of the discipline. The three papers represent the strategic, policy-related and operational aspects of R&D globalization—all based on extensive research. In their paper, ‘‘Organizing Global R&D: Challenges and Dilemmas’’, Zedtwitz, Gassmann and Boutellier describe 10 key challenges involved in global R&D and present six fundamental dilemmas, illustrated with cases, that need to be resolved. They also describe five general trends likely to influence global R&D and offer implications for managers leading globalization of R&D. The paper by Cantwell, Dunning and Janne, ‘‘Towards a Technology-Seeking Explanation of US Direct Investment in the UK’’, examines the U.S. direct investment in the UK in relation to the evolution of the industrial
Editorial
3
structure of local technological development and illustrates the effect of a shift towards internationally integrated strategies for corporate technological development. They suggest that U.S. multinational companies operating in UK have increasingly pursued more integrated strategies for their technological activities alongside the processes of globalization. Finally, Reger’s paper, ‘‘Coordinating Globally Dispersed Research Centers of Excellence—The Case of Philips Electronics’’, touches upon an important trend in multinational enterprises and deals with mechanisms of coordinating global R&D and the associated influencing factors. He illustrates the various global R&D coordinating mechanisms employing a case study on how Philips Electronics coordinates centers of excellence across its globalized R&D operations. I have found it quite a rewarding experience to put together this special issue and hope that the readers will find each one of the articles interesting and insightful. I personally believe that each one of the three papers presented in this special issue significantly contributes to and advances our understanding of R&D globalization and international business. I wish to take this opportunity to thank the reviewers for contributing their expertise and time in helping me develop the special issue.
References Boutellier, R., Gassmann, O., von Zedtwitz, M., 2000. Managing Global Innovation, 2nd edition. Springer, Berlin. Chiesa, V., 1996. Managing the internationalization of R&D activities. IEEE Trans. Eng. Manage. 43 (1), 7 – 23. de Meyer, A., Mizushima, A., 1989. Global R&D management. R & D Manag. 19 (2), 135 – 146. Gassmann, O., von Zedtwitz, M., 1999. New concepts and trends in international R&D organization. Res. Policy 28, 231 – 250. Gerybadze, A., Reger, G., 1999. Globalization of R&D: recent changes in the management of innovation in transnational corporations. Res. Policy 28, 251 – 274. Kuemmerle, W., 1997. Building effective R&D capabilities abroad. Harvard Bus. Rev., 61 – 70 (March – April). Teigland, R., Fey, C.F., Birkinshaw, J., 2000/2001. Knowledge dissemination in global R&D operations: an empirical study of multinationals in the high technology electronics industry. Manag. Int. Rev. 40, 49 – 77 (special issue). Von Zedtwitz, M., Gassmann, O., 2002. Market versus technology drive in R&D internationalization: four different patterns of managing research and development. Res. Policy 31, 569 – 588.
Deependra Moitra Infosys Technologies Limited, Electronics City, Hosur Road, Bangalore 560 100, India E-mail address: [email protected] Tel.: +91-80-5117-3873; fax: +91-80-852-0740
Editorial
R&D globalization and international business Over the last decade, global work has emerged as a new business paradigm. Bridging distance, culture and time, progressive corporations of the new economy have embarked on a relentless quest for global dominance. A quest for generating and enhancing business value and sustained market competitiveness has lead many corporations to embrace a globalization strategy. To achieve competitive edge and offer superior value propositions to their stakeholders, many technology-based businesses have launched an irreversible initiative for R&D globalization. There are several factors accelerating this trend: access to talented resource pool in other countries, competitive cost structures, proximity to markets and customers, economic liberalization, and mergers and acquisitions. Although it has been some time since companies have experimented with R&D globalization, effective organization and management of global R&D still remains an area corporations are struggling to deal with successfully. Lack of a robust R&D globalization strategy coupled with issues relating to communication and coordination, cultural diversity and technology infrastructure are some of the key factors impacting success. In addition, country-specific policies and economic conditions also have an influence on the success of global R&D. Much of the published literature on R&D globalization concerns economics of globalization and the associated political dimensions. However, adequate work has not been published on the management and organizational aspects of R&D globalization. With the intensification of competition, R&D globalization is fast becoming a competitive necessity for science and technology-based businesses. New and sound approaches are, therefore, warranted to tackle the strategic and operational aspects pertaining to R&D globalization. Effective organization and management of global R&D requires careful considerations on several fronts:
Why globalization of R&D will deliver competitive advantage to the firm? How will the firm derive cost, quality and cycle time advantages through R&D globalization? What aspects of the firm’s R&D should be globalized? What should be firm’s R&D globalization strategy? How the global R&D will be organized? What location(s) will be most appropriate for establishing the global R&D sites? How work will be allocated across the dispersed R&D locations?
1075-4253/$ - see front matter D 2004 Elsevier B.V. All rights reserved. doi:10.1016/j.intman.2003.12.001
2
Editorial
How will the firm address the issues pertaining to distance, cultural diversity, and time zone differences? What communication and coordination mechanisms will be employed? How the new R&D location will be staffed? How will the competencies of a new R&D location be grown and integrated with the firms overall competencies? What is the optimal size of the new R&D location during its start-up and steady-state phase? How the human resources management tasks such as career management and performance management will be handled? How the geographically distributed knowledge and competencies will be managed and leveraged for firm’s competitive advantage?
A good R&D globalization approach would seek to satisfactorily address all the above areas vital for success. Several scholars have made noteworthy contributions towards effective planning, organization and execution of global R&D organizations. While de Meyer and Mizushima (1989) attempted to provide an integrated approach to global R&D management, Boutellier et al. (2000) provided the first comprehensive and contemporary account of global R&D. Important contributions relating to strategy and organizational approaches in global R&D have been reported by Gerybadze and Reger (1999), Gassmann and von Zedtwitz (1999) and Chiesa (1996). An interesting study with significant practical implications concerning market versus technology drivers in the internationalization of R&D has been put forth by Von Zedtwitz and Gassmann (2002). The choice of location for a global R&D site merits a careful consideration as also the selection of the site leader and determination of the optimal size of the new site. In this regard, Kuemmerle’s (1997) work is noteworthy, which also discusses approaches to establishing new R&D sites. With R&D globalization, corporations actually establish a 24hour innovation factory, and managing knowledge and intellectual assets in such dispersed set-ups holds a phenomenal challenge. Though much investigation needs to be done in this area, the work done by Teigland et al. (2000/2001) offers good pointers. Much research needs to be done, though, to understand and successfully address the various nuances involved in global R&D. The purpose of this special issue is to present the state-of-the-art research on R&D globalization and international business, especially when R&D globalization is assuming a complex form. Although the special issue contains only three papers, I believe these make significant contributions not only to the body of literature on R&D globalization but also to the practical aspects of the discipline. The three papers represent the strategic, policy-related and operational aspects of R&D globalization—all based on extensive research. In their paper, ‘‘Organizing Global R&D: Challenges and Dilemmas’’, Zedtwitz, Gassmann and Boutellier describe 10 key challenges involved in global R&D and present six fundamental dilemmas, illustrated with cases, that need to be resolved. They also describe five general trends likely to influence global R&D and offer implications for managers leading globalization of R&D. The paper by Cantwell, Dunning and Janne, ‘‘Towards a Technology-Seeking Explanation of US Direct Investment in the UK’’, examines the U.S. direct investment in the UK in relation to the evolution of the industrial
Editorial
3
structure of local technological development and illustrates the effect of a shift towards internationally integrated strategies for corporate technological development. They suggest that U.S. multinational companies operating in UK have increasingly pursued more integrated strategies for their technological activities alongside the processes of globalization. Finally, Reger’s paper, ‘‘Coordinating Globally Dispersed Research Centers of Excellence—The Case of Philips Electronics’’, touches upon an important trend in multinational enterprises and deals with mechanisms of coordinating global R&D and the associated influencing factors. He illustrates the various global R&D coordinating mechanisms employing a case study on how Philips Electronics coordinates centers of excellence across its globalized R&D operations. I have found it quite a rewarding experience to put together this special issue and hope that the readers will find each one of the articles interesting and insightful. I personally believe that each one of the three papers presented in this special issue significantly contributes to and advances our understanding of R&D globalization and international business. I wish to take this opportunity to thank the reviewers for contributing their expertise and time in helping me develop the special issue.
References Boutellier, R., Gassmann, O., von Zedtwitz, M., 2000. Managing Global Innovation, 2nd edition. Springer, Berlin. Chiesa, V., 1996. Managing the internationalization of R&D activities. IEEE Trans. Eng. Manage. 43 (1), 7 – 23. de Meyer, A., Mizushima, A., 1989. Global R&D management. R & D Manag. 19 (2), 135 – 146. Gassmann, O., von Zedtwitz, M., 1999. New concepts and trends in international R&D organization. Res. Policy 28, 231 – 250. Gerybadze, A., Reger, G., 1999. Globalization of R&D: recent changes in the management of innovation in transnational corporations. Res. Policy 28, 251 – 274. Kuemmerle, W., 1997. Building effective R&D capabilities abroad. Harvard Bus. Rev., 61 – 70 (March – April). Teigland, R., Fey, C.F., Birkinshaw, J., 2000/2001. Knowledge dissemination in global R&D operations: an empirical study of multinationals in the high technology electronics industry. Manag. Int. Rev. 40, 49 – 77 (special issue). Von Zedtwitz, M., Gassmann, O., 2002. Market versus technology drive in R&D internationalization: four different patterns of managing research and development. Res. Policy 31, 569 – 588.
Deependra Moitra Infosys Technologies Limited, Electronics City, Hosur Road, Bangalore 560 100, India E-mail address: [email protected] Tel.: +91-80-5117-3873; fax: +91-80-852-0740