DEEL 2 FUNCTIONAL ISSUES
Chapter 6 International Innovation
Significanice
Many MNEs from icentralizing R&D -> building international NWs
Reasons
1. Need felt for presence in knowledge and innovaton clusters (input)
2. Commercial requirement: moving quickly from inno -> market
So must integrate R&D with host country manufacturing op s
Kuemmerle
Observed internatonaliiaton of R&D by observing 2 sectors (>e companies)
2 distinct types o R
D acioities
o home-base expooitinn site
Info from central lab -> foreign laboratory
“support manufacturing facilites in foreign countries
OR adapt standard products to the demand there”,
with “informaton fows to the foreign laboratory from the central lab at home”
should be close to key markets & MNE’s foreign manufacturing units = rapid
adapted
inital leadership should be “highly regarded managers from within the company”
(≈culture & systs) to forge te BiL & BuL
Bounded ratonality problem ↓ by these labs:
↓distance home country R&D & host country manufacturing
o home base aunmentinn sites
from the foreign laboratory -> the central lab at home
eyes & ears in host country, access knowledge & research
should be in critcallrelevant knowledge clusters to tap into innovaton
inital leadership should be prominent local scientst
main bounded ratonality problem: sub can’t access knowledge in foreign without
becoming an insider
each base should interact with other R&D units, as well as manufacturing & mark g
Ideal profle foreign R&D unit leaders, instrument to knowledge
reicombination
4 qualites
1. respected
2. able to integrate new site into company’s existng R&D network
3. Comprehensive understanding of tech trends
4. Able to overcome formal barriers
, When seeking acces to new ideas in local unis & scientic communites
Chapter 7 International Souricing & produiction ≈
FERDOW
Significanice
Focus on key issues of locaton +, transferability of home FSA & build-up host FSA
Senior mans mindset!
Most successful manufacturing MNEs: foreign factories = sources FSA beyond costs e.d.
3 channes in IB, drivinn assinnment o new oreinn actory rooes:
1. ↓ internationao trade tarifs => foreign facts can be > branch plants
2. Modern manu acturinn: ↑technologically capital intensive + with complex SC
requirements
3. Shortened product oi e-cycoes: requires close linkages between knowledge,
development & producton
↑ attempt to ↑ conventonal, host country prodn with at least some R&D
Possible roles of foreign manufaicturing faicilities
2 parameters on which the 6 rooes were buiot:
1. Strategic purpose of the plant
= intmately related to the host country locaton +s that MNE wants to access
2. Level of distnct FSAs held by the plant
= level of FSA refers to additonal strengths added by plant itself (↑FSA home
country)
6 Specific actory rooes
1. Offshore factory
Primarily: simply access low-cost input pf
Output exported
No new FSA development
Minimal autonomy
2. Server factory
Primarily: manufacture goods & supply a predeined ±natlreg output market
Overcome market imperfectons (trade barriers, logistc costs)
Some FSA development
Relatvely little autonomylspecialiied capabilites
3. Outpost factory
≈ black hole subs (C5)
primarily gather valuable info from advanced host country clusters (mainly input-)
manufacturing combined with
o 1.offshore (input market driven) factory
o 2.Server (output market driven) factory
4. Source factory
Chapter 6 International Innovation
Significanice
Many MNEs from icentralizing R&D -> building international NWs
Reasons
1. Need felt for presence in knowledge and innovaton clusters (input)
2. Commercial requirement: moving quickly from inno -> market
So must integrate R&D with host country manufacturing op s
Kuemmerle
Observed internatonaliiaton of R&D by observing 2 sectors (>e companies)
2 distinct types o R
D acioities
o home-base expooitinn site
Info from central lab -> foreign laboratory
“support manufacturing facilites in foreign countries
OR adapt standard products to the demand there”,
with “informaton fows to the foreign laboratory from the central lab at home”
should be close to key markets & MNE’s foreign manufacturing units = rapid
adapted
inital leadership should be “highly regarded managers from within the company”
(≈culture & systs) to forge te BiL & BuL
Bounded ratonality problem ↓ by these labs:
↓distance home country R&D & host country manufacturing
o home base aunmentinn sites
from the foreign laboratory -> the central lab at home
eyes & ears in host country, access knowledge & research
should be in critcallrelevant knowledge clusters to tap into innovaton
inital leadership should be prominent local scientst
main bounded ratonality problem: sub can’t access knowledge in foreign without
becoming an insider
each base should interact with other R&D units, as well as manufacturing & mark g
Ideal profle foreign R&D unit leaders, instrument to knowledge
reicombination
4 qualites
1. respected
2. able to integrate new site into company’s existng R&D network
3. Comprehensive understanding of tech trends
4. Able to overcome formal barriers
, When seeking acces to new ideas in local unis & scientic communites
Chapter 7 International Souricing & produiction ≈
FERDOW
Significanice
Focus on key issues of locaton +, transferability of home FSA & build-up host FSA
Senior mans mindset!
Most successful manufacturing MNEs: foreign factories = sources FSA beyond costs e.d.
3 channes in IB, drivinn assinnment o new oreinn actory rooes:
1. ↓ internationao trade tarifs => foreign facts can be > branch plants
2. Modern manu acturinn: ↑technologically capital intensive + with complex SC
requirements
3. Shortened product oi e-cycoes: requires close linkages between knowledge,
development & producton
↑ attempt to ↑ conventonal, host country prodn with at least some R&D
Possible roles of foreign manufaicturing faicilities
2 parameters on which the 6 rooes were buiot:
1. Strategic purpose of the plant
= intmately related to the host country locaton +s that MNE wants to access
2. Level of distnct FSAs held by the plant
= level of FSA refers to additonal strengths added by plant itself (↑FSA home
country)
6 Specific actory rooes
1. Offshore factory
Primarily: simply access low-cost input pf
Output exported
No new FSA development
Minimal autonomy
2. Server factory
Primarily: manufacture goods & supply a predeined ±natlreg output market
Overcome market imperfectons (trade barriers, logistc costs)
Some FSA development
Relatvely little autonomylspecialiied capabilites
3. Outpost factory
≈ black hole subs (C5)
primarily gather valuable info from advanced host country clusters (mainly input-)
manufacturing combined with
o 1.offshore (input market driven) factory
o 2.Server (output market driven) factory
4. Source factory
