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GLOBAL R&D

GLOBAL R&D EVOLUTION

Germinated as a hub for innovation.

Transformed from being a highly specialized corporate function to


project-based.

Earlier focused centrally for product development, but allocated


localization to regional centers.

Budget depended on firms risk-averseness.

Internationalization has taken place mainly by establishing


greenfield R&D sites, expansion of R&D capabilities in local
subsidiaries, or acquisitions of local companies or companies with
local R&D sites.

R&D ORIENTATIONS

Ethnocentric Centralized R&D organizations


Assumed

home country is technologically superior to its subsidiaries


and affiliated companies in other countries. Has a lack of transnational
R&D processes as all R&D activities are carried out at home base.

The

central R&D is protected 'think tank', create new products and


manufactured and distributed in other locations worldwide. (Example,
Toyota in UK and Volkswagen in China). Central and tight
coordination/control of R&D program.

Geocentric Centralized R&D


Dependent

on foreign markets and local competencies. Model features


a multicultural and multinational workforce while retaining efficiency
advantage of centralization.

Has

close contact with international sites, to overcome lack of market


sensitivity. Eg. Nissan

R&D ORIENTATIONS

Polycentric Decentralized R&D

Recognises crucial local requirements such as local codes and


market requirements. Strong orientation on regional markets
(example European MNCs during 70s and 80s). Occur during
transformation from holding structure to integrated corporate
management.

Customization before standardization

R&D Hub Model

R&D centre in home location is main laboratory for all R&D


activities, establishing worldwide lead in most technological fields.

Usually reaction by centralized companies to internationalization


of resources. Has tight control of decentralized R&D. Foreign R&D
sites are confined to designated technological areas; usually start
as tech listening posts.

R&D ORIENTATIONS

Integrated R&D Network


Each

unit in network specializes in a particular product, component or


technology area, perhaps a set of core competencies/capabilities, work in
partnership with one another (Highly internationalized)

Coordination

authority for tech and component development is allocated


based on individual strengths and capabilities of R&D units.

Transnational

projects are a significant component in this organization;


high standards of collaboration and coordination is required.

Strengths

(Coupling of specialization and synergy effects, global before


local efficiency, organizational learning across many locations)

Weaknesses

(High coordination costs, complexity of intuitional rules and


refining of local strengths)

Schindler, established

competence-based R&D network, rapid expansion


done through acquisitions. To realize synergy from restructuring of org in
1998, focus was on drive and control of core competencies instead of
functional. Three areas were established, each with own mission, result of
this, low cycle time development of product systems.

CHALLENGES IN R&D

Schindler
Systematic

management of new technologies;


Integration of decentralized technology and
application knowledge;
Concentration on technical core competencies;
IT infrastructure and their role in concurrent
engineering

CHALLENGES IN R&D

Hitachi
Synergy

in multidimensions
Be prepared at competitive front end of R&D;
Social role and responsibility becomes more
global
Worldwide standardization of specifications and
protocols.

CHALLENGES IN R&D

Nestle
Realize

synergies between decentralized R&D


competence centre
Link research with business development;
Move towards a learning organization (knowledge
management).

CHALLENGES IN R&D

SAP
Efficient

reconciliation and decision processes;


Knowledge transfer between different sites;
Roll-in (customer to SAP) and roll-out (SAP to
customer) processes;
Process adjustments.

GLOBAL R&D - CHALLENGES

Function to integration
Balancing

scientific / engineering / technical


skills and team performance

Close to centers of tech creation and


application knowledge
Formation

of clusters/jungles

Integration of R&D in the global network


Degree

of cooperation between individual R&D


sites and the dispersion of their internal
knowledge and competencies base

GLOBAL R&D - CHALLENGES

Establishing overlaying structures


Constrained

by geographical distance,
organizational dispersion, and hierarchical
structures
Create project structures, transnational process
or network structure

Decentralizing R&D
Using

external sources in a rigid R&D structure

Market orientation

GLOBAL R&D - CHALLENGES

Processes
Difficulties

in managing invention, testing, development,


production and markets that are dispersed

CHALLENGES

Local vs Global

Processes vs Hierarchy

Creativity vs Discipline

Control vs Open source

Face-to-face vs ICT

Long-term vs Short-term

FACTORS AND INTERDEPENDENCIES OF GLOBAL


R&D

GLOBAL R&D ORGN FIT

GLOBALIZATION OF CORPORATE R&D


NETWORK

Actors - transnational corporations (TNCs), home


and host countries.
Degree of globalization - depends on the type
and cost of complementary knowledge available.
Degree of integration - the greater the degree of
complementary knowledge available in a host
country, the greater the integration.
The greater the degree of complementarity
between home country and host country, the
greater will be the degrees of globalization and
integration (Reddy, 2000).

GLOBALIZATION OF R&D - ACTOR


NETWORK (REDDY, 2000)

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Transnational Corporation

Home Country

Host Country
degree of complementarity

CATEGORY OF R&D UNITS

Technology transfer units (TTUs) - to facilitate transfer of


parents technology to affiliate and local technical
services;
Indigenous technology units (ITUs) - to develop new
products for the local markets, drawing on local
technology;
Global technology units (GTUs) - to develop new products
and processes for major world markets
Corporate technology units (CTUs) - to generate basic
technology of a long term nature for corporate use
(Ronstadt, 1977);
Regional technology units (RTU) - to develop products for
the regional markets (Reddy and Sigurdson, 1994).

GOLDPEAK ELECTRONICS R&D

Core Issue??

Yearning for globalizing R&D..why?


Why China?
GPE mode of globalizing R&D

Is it about R&D?
What is it about?

Duplicating R&D?
Issues?

Way forward??