Integrating Worldwide Dispersed Technological Competencies: An Organizational Paradigm for the Contemporary MNC in the Knowledge Era Chasiotis Michail The 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 role 2. 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 scale 1. 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 learning 2. Knowledge creation 3. Knowledge management capabilities 4. International technology alliances 5. R&D expenditure decisions

Goals of R&D Internationalization Competition in all significant markets Ability to innovate Improve production processes – Overall cost orientation Knowledge 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 market MAXIMIZATION 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 InteractiveDelegation of managerial International transfers potential and intervention Cross boarder visits in specific and critical Strategic teams tasks for the corporation Training teams Organizational-Informal, PermanentCreate common Corporate Culture BasedDifficult to changebackground for the whole Shared Knowledge Socialorganizational entity Informal ITInformal, Dynamic Integration through data Networks Permanent, Both System & management Video Conferencing Communicative oriented but Data Bases rather Impersonal s

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