Autonomy of Foreign R&Amp;D Units in an Emerging Market: An Information Processing Perspective

Zusammenfassung

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This study uses an information processing view to assess how autonomy of foreign R&D units in a major emerging market is influenced by the organizational and environmental conditions they face. The researchers argue that specification of the autonomy is an optimal decision requiring a balance between the costs of information processing capacity and the needs of information processing for performing R&D tasks. The analysis suggests that autonomy of foreign R&D units increases when they emphasize development (as opposed to research) and local market (as opposed to global market), and decreases when R&D units face higher regulatory influence and lower industrial growth. R&D entry mode (alliance vs wholly-owned) does not have a main effect on autonomy specification but moderates the link between environmental hazards and autonomy level.

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Auszug

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Autonomy of Foreign R&Amp;D Units in an Emerging Market: An Information Processing Perspective

Introduction

Many multinational enterprises (MNEs) are increasingly dedicating their important resources (financial, technological, and human) to global research and development (R&D) in search of sustained competitive advantages in the global marketplace. Globalizing R&D is the process of locating and operating R&D laboratories in different countries under the coordinated and integrated system of the company's headquarters. Increased importance of innovation, heightened inter- and intra-organizational linkages, and changes in foreign market demands all propel this phenomenon (Birkinshaw 2002, Bowonder/Yadav 1999, Frost 2001, Kuemmerle 1999, Stuart 2000). Global R&D programs have become a mark of international sophistication and a main avenue for building a firm's global competitive power. Globalizing R&D has costs and benefits, but formulating and executing a viable strategy that matches both organizational needs and market conditions increases the likelihood of global success (Pearce/Singh 1992). Unlike in the past, where technology flows were often perceived as unidirectional from the parent company to overseas affiliates, firms are now considering foreign R&D units as critical sources of technological competencies and are thus assigning them new tasks vital to the firm's global strategy and global success (Bartholomew 1997, Cheng/Bolon 1993, The Conference Board 1995, McEvily/Chakravarthy 2002).

Accordingly, researchers in the field of global R&D have addressed numerous issues including why globalize R&D (lammarino/Michie 1998, Kuemmerle 1997), how to structure global R&D units (Chiesa 1996, Klein/Sorra 1996, Pearce 1989), in what ways can firms select the right R&D sites, choose appropriate entry modes, hire local talents, and deal with the indigenous community (Cheng/Bolon 1993, Hagedoorn/Narula 1996, Jones/Davis 2000, Julian/Keller 1991, Penner-Hahn 1998, Porter/Stern 2001), and how to improve inter-unit communication, information sharing, and knowledge transfer within an MNE community (De Meyer 1992, Katz/ Rebentisch/Allen 1996, liebeskind/Oliver/Zucker/Brewer 1996, Nobel/Birkinshaw 1998). While autonomy of R&D units has been addressed by prior research including Behrman and Fischer (1980) and Kuemmerle (1997) and Nobel and Birkinshaw (1998), an effort that examines contingent factors, both external (environmental) and internal (organizational), effecting the level of foreign R&D units' autonomy in the context of an emerging market is still inadequate.

This study focuses on foreign R&D units in an emerging market and tests our propositions using these units in China. Many MNEs are extending their R&D activities not only in other developed countries but also in emerging markets (e.g., India, China, Singapore, Taiwan, Brazil, South Korea, Mexico, Hong Kong). MNEs went to emerging markets to obtain better access to local talent and resources and to improve proximity to local customers. However, extant research on globalizing R&D into emerging markets remains scant. To advance our understanding of managing foreign R&D in a major emerging market, this study emphasizes how autonomy of foreign R&D units in this setting is contingent upon, or copes with, the organizational needs and environmental conditions that R&D units face. An MNE's organizational needs in this setting may differ from those in developed countries because of unique opportunities (e.g., India's rich pool of software engineers and Malaysia's government encouragement via tax breaks) as well as peculiar challenges (e.g., property rights protection and cultura...

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