Chapter 6 - International Innovation

Question 1

Idea of Kuemmerle’s

Answer 1

Many MNEs decentralise R&D by building a worldwide network of R&D laboratories

Question 2

The two types of labs by Kuemmerle

Answer 2

Home based exploiting

Home based augmenting

Question 3

Home based exploiting

Answer 3

Primarily receives information from the central lab in the home country and adapts products to local demand

Question 4

Home based augmenting

Answer 4

Primarily accesses local knowledge and sends information back to central lab

Question 5

What did Kuemmerle recommend?

Answer 5

That both types of laboratories should regularly interact with the firm’s other R&D units.

Question 6

Kuemmerle’s discovery on home based exploiting

Answer 6

Supports manufacturing facilities in foreign countries or adapts standard products to the local demand.

Information flows to the foreign laboratory from the central lab at home

Question 7

Kuemmerle’s discovery on home based augmenting

Answer 7

Acts as at the firm’s eye and ears in host countries and accesses knowledge from rival and research institutions there.

Information flows from the foreign laboratory to the central lab at home

Question 8

Kuemmerle outlined 3 stages in the development of foreign R&D units

Answer 8

Selecting decision makers

The set of decision and actions that strengthen the facility’s initial capabilities

The decision and actions designed to maximise

Question 9

Selecting decision makers

Answer 9

Most MNEs set up a tech steering committee in which the members have technical and organisational expertise.

This approach reduces the bounded rationality problems faced by the MNE because it reduces the uncertainty involved in assessing alternative high distance locations

Question 10

Kuemmerle identifies 4 redeeming qualities that candidates for the R&D should have

Answer 10

The are at once respected scientists or engineers

They are able to integrate the new site into the company’s existing R&D

They have a comprehensive understanding of technological trends

They are able to overcome formal barriers when they seek access to new ideas in local universities

Question 11

Limitations

Answer 11

The model ignores tensions between the host country and the central HQ

Hard to monitor the sub-subsidiary’s contribution to the overall corporate strategy

Does not include the possibility of joint ventures or strategic alliances as options to tap into foreign knowledge

Ignores potential hidden costs of offshoring