MNE Topic 7 Flashcards
global knowledge management
- management of innovation
- under R&D function
innovative companies
tech sectors
e.g. apple e.g. Tesla
ability of innovation to drive performance
- most innovative = outpace broader market in SH returns by significant margin 3.3% av per year
innovation ready company
3 characteristics
- makes innovation priority
- commits inv and talent to it
- ready to transform inv into results
nearly 90% of innovation ready companies plan to increase innovation spending
2 innovation trends
- collab with comp in complementary sectors
- mergers and acquisitions = new tech/process = talent
innovation and sustainability
one of top priorities
2022 - 56% ranks innovation and climate sustainability among top 3 priorities
Global Innovation Index
- Switzerland
china = sole middle income in top 30
3 R&D types
US is e.g.
- Domestic - conducted in US by companies HQ in US
- Imported - conducted by US by companies HQ elsewhere
- Exported - conducted in other countries by companies HQ in US
in-region R&D spending
domestic & imported R&D
- both R&D spending by local companies and R&D spending imported from other regions
4 worldwide R&D innovation trends in MNCs
- biggest innovators = conduct parts of R&D abroad
- where spend R&D money = changed
- regional ranking for corp R&D = Asia, North America and Europe
- Asias rank = driven by China and India
imported R&D china
R&D spending in China by companies HQ in other countries - nearly doubled 2007-2015
india
growth in corp R&D conducted in India rose 115% 2007-2015 = £28billion
growth powered from MNCs - imported R&D
software R&D = largest area
why do MNCs move to Asia
3 reasons
- Close to market -> tech centre - around the clock capability = accelerate dev work (time difference)
- Accessing talent technical talent - in close proximity to regional customers
- low cost labour
hollowing out of manufacturing in advanced economies
developing:
1. increase low skilled jobs
2. boosted skilled labour force -> upgrading strategies & physical co-location of high value added activities with production
advanced:
1. impoverished competencies = skill shortage & skill erosion (low and high skilled jobs)
2. skill mismatch
US
- increased R&D exports -> muted by rise in imports
- bigger gain = imports from European invested heavily in US -> 63% of US R&D total in 2015
Europe
European spend less R&D at home
exported R&D - spending in other countries by companies HQ in EU
models explaining differentiating national subsidiaries roles
- UN model of multinational management
- Headquarters hierarchy syndrome
UN model of multinational management
- allocating roles/responsibilities to national subs in same general terms
- corp HQ treats all subs in uniform manner
headquarters hierarchy syndrome
- subs are merely implementers of MNCs worldwide strategy
tensions = leaders (power), merging = resource freedom
4 consequences of symmetrical treatment between HQ and subsidiaries
- overcompensation for needs of smaller/less crucial mkt
- under-responsiveness to strategically important needs
- underutilisation of company’s worldwide assets & org capabilities
- demotivated country mngers
solution of symmetrical treatment
move towards MNC differentiated network
homogenous -> differentiated sub role
concentrated -> dispersed responsibilities
4 differentiated roles of national subsidiaries
- strategic leader
- contributor
- black hole
- implementer
strategic leader
HIGH strategic importance of local env
HIGH competence of local org
partner of HQ
contributor
LOW strategic importance of local env
HIGH competence of local org
valuable subsidiary expertise
implementer
LOW strategic importance of local env
LOW competence of local org
lack potential to be contributors
black hole
HIGH strategic importance of local env
LOW competence of local org
not acceptable
strong local presence essential
3 managerial implications for subsidiaries roles (HQ)
- common strategic direction (orgs with differentiated tasks and dispersed responsibilities)
- differentiated network (allocate roles & ensure subs participate in corp decisions)
- direct process (coordinate roles & distribute responsibilities)
International companies stimuli
4 examples
wide range
- customer preference
- comp behaviour
- gov demands
- sources of tech info
potential source of innovation & learning for company
3 ways international companies capitalise on the advantages
- responsive in absorbing info
- national companies = recognised as source of expertise
- cooperative effort - works better than centralised direction
centres of excellence
embodies set of capabilities -> leverage/disseminated to other firm parts
source of value creation
COE within foreign subsidiaries
7 examples of COEs
- Pfizer -> R&D lab specialised in medicinal/pharma sciences
- IBM -> specialise in nanotech in Zurich
- Siemens -> R&D lab in Bangalore india - software for 30 areas of business for India and worldwide mkts
- Google - cloud computing
- VW Battery cells
- Samsungs marketing
- J&J 3D printing
Deloitte COE Singapore
- create solutions that anticipate mkt disruptions - address skills, mismatch challenge and identify future job requirements
- global flagship with Deloitte
-knowledge & skills transfer, local capabilities built
- train and employ locals and global talent in highly sought areas
COE 4 benefits
- provide research
- best practices
- support
- training
key area = tech (cloud computing/3D printing) or broad area of study (future of work)
3 Conditions COE emerges in MNCs
- external factors
- inter-unit relationships
- parent firm investment
produce COE and then performance
COE qualities and the qualities of performance
- strong capabilities
- formal recognition
- greater than unit lvl contribution
performance
1. profitability & competitiveness
2. innovation
3. learning and knowledge transfer
2 external factors -> subsidiary more likely to contain COE
- greater strength & dynamism of local industry “diamond” (location) -> NOT SUPPORTED
- greater impact of external org on dev of sub competence (connection) -> SUPPORTED
both hypotheses
3 internal factors -> subsidiary more likely to contain COE
- greater impact of other units within Multinational network on dev of sub competence (connections) -> SUPPORTED
- greater inv made by parent -> SUPPORTED
- greater autonomy -> NOT SUPPORTED
Porter’s national diamond
framework = explain how nation can achieve competitiveness in given industry
four attributes promote or impeded creation of comp adv
attributes of Porter’s national diamond
- factor conditions
- related and supporting industries
- firm strategy/structure and rivalry
- demand conditions
-government policy
-chance
4 outcomes (performance) of COEs
1- superior capabilities and greater than unit locus of exploitation for capabilities
2- drive +Ve perf on several dimensions
3- profitability, competitiveness, innovation, learning
4- perf influence COEs formation process e.g. inv in unit
barriers to global knowledge management
barriers to cross border collab exist at lvl of source of knowledge and recipient of knowledge
- unwilling to seek input and learn from others
- unwilling to help
- inability to seek and find expertise
- inability to work together and transfer knowledge
seekers of help
- unwilling to seek input/ learn from others = “not invented here”
- close themselves off - inability to seek/find expertise = “needle in a haystack”
- cant find or search efficiently
providers of help
- unwilling to help = “hoarder of expertise”
- reluctant to share - inability to work together/transfer knowledge = stranger
- willing but cant easily transfer what they know
nature of knowledge
tacit = difficult to articulate in meaningful and complete way
codified = made independent from knowledge carrier
specific to context and culture = cross cultural distance
addressing barriers to global knowledge management (LEVERS)
- leadership
- HR procedures
- latent cross-unit mechanisms
-diagnose source of cross border barriers and use levers to address sources
- measures are costly and should be focused on deliverables
Leadership
- behaviours
- shared values related to team
- unifying goal
unwilling to seek input & unwilling to help
HR procedures
- recruit
- promote
- compensation
unwilling to seek input or help
Latent cross unit mechanisms
- informal networks -> connectors, strong professional relationships
- formal lateral mechanisms - cross unit groups
- info systems (knowledge mngment database, benchmark system)
unable to find expertise or transfer knowledge
Centres of excellence qualities
- Strong capabilities
- Formal recognition
- Greater than unit level contribution
