Managing Global R&D Networks: To Realize the Full Value of Distributed R&D Networks, Multinational Corporations Must Internalize Local Knowledge, Share Knowledge across Locations, and Integrate Local Subsidiaries into the Larger Organization

Article excerpt

Today's multinational companies (MNCs) expand into intemational locations for more than access to new markets. They recognize that creating breakthrough innovations requires accessing and leveraging the full range of knowledge available internationally. One of the best ways to tap into this knowledge is with local R&D facilities in international centers of technical excellence. However, leveraging regional knowledge and incorporating it into existing knowledge networks is exceptionally difficult. With the guidance and participation of IRI member companies, this ROR hopes to expand on our understanding of how MNCs can successfully connect global subunits to create an international, open, innovative knowledge network.

This ROR was formed during the 2011 Networks/ROR meeting in Coral Gables, Florida, after the topic was highlighted by multiple attendees at a group brainstorming session as being exceptionally important. During the 2011 Annual Meeting in Philadelphia, we had our first official meeting and invited subject matter experts Ram Mudambi and MB Sarkar from Temple University and Michelle Snyder from PepsiCo to present on the topic during a breakout session. In this update, we provide a small overview of the background that has informed our initial conversations as well as some of the questions that we hope to focus on in this ROR.

Evolution of Global R&D Strategies

Early MNCs moved overseas largely to take advantage of lower costs for resources and labor for production activities. R&D was usually conducted in the home country headquarters, and innovations were introduced to subunits abroad, which, if they did any R&D at all, focused on tailoring technologies to the specific needs of the local market. In this structure, knowledge and innovation moved within the MNC in a specific direction--from headquarters to global subunits and subsidiaries--and subunits worked on technology that was only incrementally different from that developed in the headquarters. Today, the globalization of MNCs is no longer limited to production and marketing; leveraging knowledge and innovation developed intemationally has become increasingly important. In this modern knowledge ecosystem, subunits are often tasked with developing groundbreaking innovations themselves or tapping into the knowledge being developed and advanced in their host countries. In this model, knowledge must flow in multiple directions--from HQ to subunit, from host country to subunit, from subunit to HQ, and from subunit to subunit.

Managing this global network of R&D resources can be challenging in several ways. Obviously, there are coordination challenges related to geographic and time differences. Cross-cultural differences can add a whole other level of complexity to this management challenge. In this ROR, we focus on a third type of challenge--the strategic and tactical challenge of managing a global R&D network comprising multiple subunits. As an outcome of this ROR, we hope to put together roadmaps to help organizations think through:

* Their overall objectives for going global;

* How and why they choose locations for subunits;

* The types of innovation activities on which they want each subunit to focus; and

* Appropriate structures and tactics for coordinating knowledge and technology flows between headquarters, regional headquarters, and subunits.

From Strategy to Implementation

Businesses go global with various objectives--leveraging cost savings, accessing new markets, acquiring new technologies and knowledge, finding novel ideas or perspectives, or defending against competitors, among others. These various objectives can influence organizational design decisions related to going global. For example, if an organization hopes to acquire new knowledge from global locations, should it create listening posts, open full-fledged R&D facilities, create alliances, or simply monitor news and communication channels? …