Integrating Worldwide Dispersed Technological Competencies: An Organizational Paradigm for the Contemporary MNC in the Knowledge Era

Chasiotis MichailThe American College of Greece

Global Business Environment

Globalization: Not only in markets (product oriented) but in industrial level (production orientation)

MNCs (Multinational Corporations): Advantages founded in the “host” environment

Global Business Environment (cont’ue)

Two close related developments:1. A shift towards autonomous and decentralized subsidiaries role2. MNCs shift from “value appropriator” to “value creator”

Stress the importance to all inputs of production which enhance competence and ascribe value

to the corporation.

Technology Role

Importance on technology creation, transfer and diffusion

On global scale1. Innovation (final production and processes)

2. Group level knowledge capacity 3. Exploitation of host country’s

capabilities Diffusion internally & externally

Decentralization of R&D units Case: R&D operation conducted in

home country Evolution: R&D operation

internationalization Issues involved:

1. International learning2. Knowledge creation3. Knowledge management capabilities4. International technology alliances5. R&D expenditure decisions

Goals of R&D Internationalization

Competition in all significant markets

Ability to innovate Improve production processes

– Overall cost orientationKnowledge generation and

transfer

Goals of R&D Internationalization (cont’ue)

Exploit technological capabilities on host markets

Exploitation of technological patterns of the host market

Goals of R&D Internationalization (cont’ue)

Exploit technological capabilities on host markets

Exploitation of technological patterns of the host marketMAXIMIZATION OF PROFITS – SUSTAINABLE COMPETITIVE

ADVANTAGE

Roles of Decentralized Operationalization Expected Degree of

R&Ds Integration

Support Laboratory (SL) Adaptation of products and Tight, Formal

production process derived Process Based

by HQs

Locally Integrated Production of Differentiated Individual Oriented

Laboratory (LIL) products Formal & Informal

International Investments in Basic Research Flexible

Interdependent Advancements of MNC Independent

Laboratory (IIL) scientific platform Non-Linear

Coordination from Organizational Viewpoint Link of organizational structure and

innovative process Managerial and strategic challenges Synchronization and communication

properties Not formulation but implementation of

strategies Freedom VS Centralization of R&D units

Coordination Characteristics Aim Coordination

Mechanism Instruments

Process-Based Standardized, Structural Pre-specify the expected Formal Reporting

Technocratic, Permanent behavior of Individuals systems, Control of

results, General rules, Corporate Policies

Interpersonal Systematic and Interactive Delegation of managerial International transfers

potential and intervention Cross boarder visits

in specific and critical Strategic teams

tasks for the corporation Training teams

Organizational- Informal, Permanent Create common Corporate Culture

Based Difficult to change background for the whole Shared Knowledge

Social organizational entity

Informal IT Informal, Dynamic Integration through data Networks

Permanent, Both System & management Video ConferencingCommunicative oriented but Data Bases

rather Impersonal E-mails

Integration of Global R&D Activities

Determinant factors: role of decentralized R&Ds and their extent of autonomy

1.SLs: Transfer Technology from HQs - Hierarchical models of knowledge diffusion (Full Control by HQs)

Integration of Global R&D Activities

Determinant factors: role of decentralized R&Ds and their extent of autonomy

1.SLs: Transfer Technology from HQs - Hierarchical models of knowledge diffusion (Full Control by HQs)

Centrally oriented advantages – Technocratic coordination mechanisms

Integration of Global R&D Activities (Cont’ue)

2. LILs - Incorporation of all available resources on technological expansion (intermediate autonomy from HQs)

Integration of Global R&D Activities (Cont’ue)

2. LILs - Incorporation of all available resources on technological expansion (intermediate autonomy from HQs)

Person-oriented mechanisms

Integration of Global R&D Activities (Cont’ue)

2. LILs - Incorporation of all available resources on technological expansion (intermediate autonomy from HQs)

Person-oriented mechanisms

3. IILs - Basic and applied research (high autonomy from HQs)

Integration of Global R&D Activities (Cont’ue)

2. LILs - Incorporation of all available resources on technological expansion (intermediate autonomy from HQs)

Person-oriented mechanisms

3. IILs - Basic and applied research (high autonomy from HQs)

Both internal coordination and technocratic mechanisms