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A Taxonomy
Vittorio Chiesa
This work studies the management and organization of global R&D projects, i.e.
projects leading to innovations to be exploited in multiple countries. It provides
a taxonomy of how firms conduct such projects. The empirical base is composed
of twelve multinational companies, from the three major areas (Europe, Japan,
North America), operating technology-intensive businesses. Two basic structures
are identified: the specialization based, where one foreign lab (the firms center
of excellence) is assigned the responsibility for developing a new product, process
or technology on the basis of a global mandate, and the integration based, where
different units contribute to technology development programs and global innovations are the result of the joint work of these units. In each categories two
sub-cases have been found: the center of excellence and the supported specialization, on the one hand, and the network and specialized contributor structures,
on the other. The four structures have been studied in relation to: the key
characteristics of the organization and management of global projects (in each
phase, from conception to introduction into the market), the organizational
factors affecting the success, the context conditions in which the structure is
considered appropriate. 2000 Elsevier Science Inc.
Introduction
n important aspect of the general process towards the globalization of business activities
is the increasing amount of technical activities
carried out abroad. The traditional explanation is that
foreign manufacturing and marketing need to be technically supported and the geographical dispersion of
technical facilities facilitates the penetration into
foreign markets [26]. This is still a reason to go
abroad, and the growing globalization of manufacturing and marketing pulls that of R&D. However,
there are also other factors intrinsic to the process
Address correspondence to Vittorio Chiesa, LIUC (Libero Istituto Universitario, Carlo Cattaneo), Corso Matteotti 22, 21053 Castellanza (Varese), Italy.
J PROD INNOV MANAG 2000;17:341359
2000 Elsevier Science Inc. All rights reserved.
655 Avenue of the Americas, New York, NY 10010
342
BIOGRAPHICAL SKETCHES
Vittorio Chiesa is Associate Professor of Business Economics and
Organization at LIUC (Libero Istituto Universitario Carlo Cattaneo,
Castellanza). He teaches Business Economics and Organization at
LIUC and at Politecnico di Milano. He also teaches Technology
Strategy and Economics of Technical Change at LIUC. He obtained
his Masters Degree in Electronic Engineering at Politecnico di
Milano. He was previously with CibaGeigy and Pirelli, and with
the National Research Council of Italy (Istituto di Tecnologie
Industriali e Automazione, Milano) as Senior Researcher. He was
Visiting Researcher at London Business School at the Operations
Management Department. Since 1992, he is responsible of the
research project R&D Strategy and Organization at the Centre for
Strategy and Strategic Management at Politecnico di Milano. His
main research areas are: technology strategy, international R&D,
R&D organization.
resources and entrepreneurship of their various subsidiaries, to integrate resources and capabilities of
their different units and to leverage the uniqueness of
resources of each unit to generate innovations to be
exploited world-wide. Pockets of excellence, which
may have developed foreign locations as the result of
the firm history and administrative heritage, need to be
exploited on a worldwide basis [2].
Therefore, companies tend to assign their R&D
company units different roles, creating organizations
that can be viewed as networks of differentiated units,
linked by tight and complex controls and flows of
people, information, materials, technology [11].
Global R&D organizations are created, in which the
contributions of the dispersed units, each with a differentiated mission, are interlinked and integrated each
other. The roles of the dispersed units are defined
according to global plans and links among the various
units are established. Such global R&D structures
cover a wide range, from those very simple in which
there is one foreign center of excellence to carry out
the firms R&D in a certain field, to the most complex
where multiple centers are linked each other in a
network [2,6,17]. This means that technical activities
and the product development process become more
and more complex and involve a number of units that
integrate each other.
So far, research works have mostly investigated
certain specific aspects of distributed R&D: determinants for going abroad [5,9,14,19], establishment processes of R&D activities in foreign countries [10], types
of foreign R&D labs [5,13,19,20,22,23], locational factors [15]. Fewer studies have attempted to take a more
comprehensive view of global R&D organization, that
is, whether there are international R&D structures,
V. CHIESA
forms of division of labor, interdependencies and coordination among geographically dispersed units
[1,2,8,12,18,25,27].
From a managerial perspective, much attention has
been paid to how to manage a foreign R&D unit,
especially how to balance central control and autonomy [3,4]. De Meyer [7] casts light upon the mechanisms that support global R&D management, identifying the planning system (seen as a learning
procedure), the communication system, and individual
roles (such as the ambassador of foreign units) as key
elements of a global R&D structure. However, the
management and the organization of global R&D
projects have been rather neglected. This paper attempts to fill this gap. It studies the management and
organization of global R&D projects, meant as
projects leading to innovations to be exploited in multiple countries. It provides a taxonomy of how firms
conduct such projects. It is based on the results of an
empirical analysis including 12 companies.
The paper is composed of three sections, the first
presents the field research and describes the organizational structure of the international R&D of the sample
firms, the second deals with the management and
organization of global projects in each category of
international R&D structure, the third draws conclusions and implications.
343
Company
A
B
C
D
E
F
G
H
I
L
M
N
Total
Research
Labs
Development
Labs
Adaptive
Units
5
3
4
4
2
5
4
2
1
34
10
4
5
1
2
2
3
3
2
3
35
10
5
9
2
9
12
4
58
Scanning
Units
% of Foreign
R&D (Personnel)
6
11
9
4
2
35
30
33
60
30
35
15
28
5
3
42
26
30
Number of
Employees in
R&D
7,500
7,000
16,400
10,350
8,000
7,500
4,950
7,600
12,000
8,000
2,800
3,600
95,600
Field researchstep 1
The first step aimed to classify the foreign R&D units.
The following data and information were collected for
each R&D unit:
The profile of the unit, especially the technological
scope of the activities, that is, the range of technologies or products developed;
The time scale of the projects carried out by the
unit;
The objective of the projects carried out by the unit
(developing new products, developing new technologies, exploring new technologies), so identifying
whether or not there is a business focus;
The organizational position of the unit (corporate
or business unit level);
344
V. CHIESA
time scale (more than three years), with the objective of exploring new technologies, researching for
new technical paradigms, or accumulating knowledge in a certain field, not directly related to a
single innovation. Usually, they are at corporate
level and define their mission on the basis of the
range of technologies developed. Some labs are
highly focused on one technology, others conduct
research on a wide range of technologies. Their
mandate is by definition global because they do
not serve a specific market or business, but develop technologies that will be subsequently exploited in new product development activities;
4. Technology scanning units that monitor the technological progress and/or market evolution2 in foreign countries. As later described, although these
units do not carry out actual technical activities,
they are part of a firms international R&D structure and thus are relevant to the present study.
Once identified the types of foreign R&D units, the
following step was the description of the international
R&D structure.
Field researchstep 2
The second step aimed to identify whether and how
geographically dispersed units are structurally interlinked each other. In other words, the international
R&D organizational structure was identified.
Various research works studied the management
and coordination of dispersed R&D capabilities and
efforts within firms. Most concluded that firms are
moving towards network organizations, in which there
are forms of division of labor and interdependencies
(among the others, [7,12]). However, they often focused on the managerial implications of such organizations and treated these network organizations as of
one type. Bartlett and Ghoshal [2] identified two major
ways of organizing activities on a transnational basis:
the locally-leveraged (in which the resources of individual national subsidiaries are leveraged to create
innovations to be exploited on a worldwide basis) and
the globally linked (where resources and capabilities
of dispersed units are linked and innovations are generated jointly). The field research looked at the different forms of links among dispersed units and attempted to provide a taxonomy of global R&D
organizations.
The topics treated during the interviews were aimed
to identify for each unit:
345
346
V. CHIESA
347
ture market tendencies and the degree of differentiation among the different markets where to
commercialize the innovation.
348
V. CHIESA
In this section the network and the specialized contributors structures are analyzed in details.
Network structure
This organizational structure consists of a network of
labs dispersed in different countries working in the
same product/process/technology area. Each lab is
usually free to undertake its own R&D initiatives, and
allocate a certain amount of resources to projects developed locally and suitable for local exploitation.5
The central problem is to create mechanisms to coordinate these dispersed efforts and avoid duplications.
Usually, there is a supervisor unit fulfilling these tasks.
As a result of this coordination, labs are often involved
in cross-border projects aimed to develop global innovations. For the purpose of this paper, these cases are
examined. Figs. 1 and 2 describe two cases of global
projects in network structures.
Global project organization and management
Different organizations are usually adopted in research
and development activities. In research, each unit carries on its own research program; there is coordination
but a certain duplication is allowed. Allowing that
different units approach the same problem in parallel
(from different perspectives and/or in different ways)
is recognized as a means to accelerate the process of
learning. As a matter of fact, this increases the creativity and/or creates a form of internal competition
among units. The R&D manager of the pharmaceutical
firm of the sample stated that
. . . although it increases research costs, the need to
speed up the research process and shorten time to
349
350
V. CHIESA
351
Global
R&D
Structures
Global
R&D
Structures
Network
Specialized
Contributors
Temporary assignments of
people to other units
Information exchange through
electronic linkages
Supported
Specialization
Center of
Excellence
Project Conception
Creation of
international
teams
Creation of
international
teams
Gatekeepers of
the center to
capture technical
and market needs
Early
involvement of
subsidiaries as
sponsors
Product/Technology
Transfer
Global meetings
with people of the
center and of the
scanning units
Early
involvment of
subsidiaries as
sponsors
Project
Development
Project
Definition
Project Phase
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2000;17:341359
V. CHIESA
353
354
principles of the project is defined: the units involved, the project team, the assignment of tasks
and responsibilities, the definition of the project
manager, the coordination mechanisms among the
various units/people. These choices are often critical for the success of global projects;
3. The involvement of different units in the development phase of global project (that occurs in the
integration based structures) requires the use of a
wide range of coordinating mechanisms such as
global meetings, global committees, shared use of
technology development systems, creation and colocation of international teams. However, the coordination effort strongly varies from research to
development. Whereas, in research, doing global
projects means doing research works in multiple
locations, and compare results once research activities have been done; in development, it means
doing things jointly, putting together competencies
coming from different subsidiaries and sources,
and often co-locating people coming from different units. Therefore, in development activities,
face-to-face communication is still strongly preferred to the use of telecommunication and teleconferencing systems. Also, in the specialized
contributors structure, although the R&D work is
divided into different tasks carried out by different
units, the colocation of the team is required in
certain phases. This especially occurs in later
phases of the new product development process
such as prototyping, engineering and preproduction activities;
4. Transfer of results is facilitated in integrationbased structure as multiple countries are involved
from the beginning in the conception, definition
and development of the innovations (this, of
course, concerns countries of which the R&D unit
is involved in the R&D project; in the other, the
introduction of the innovation needs to be supported as in the specialization based structures).
In the specialization based structures, different
mechanisms can be adopted to support this
phase (personnel flows, liaison groups, training
program);
5. Generally speaking, given the dispersion of resources and the coordination efforts, the integration based structures are more costly. However,
their higher cost of coordination is partially compensated by lower costs of transfer of results and
innovation introduction.
V. CHIESA
Supported
Specialization
Center of
Excellence
Organizational
Success
Factors
Appropriate
Context
Network
Table 3.
Global R&D Structures: Organizational Success Factors and Appropriate Content
Specialized
Contributor
356
V. CHIESA
Notes
1. The selection of the project on which to make the
case study was left to the managers. The request
was that the project was among the most important
projects of the last 3 years (the importance was
evaluated on the basis of the financial effort).
2. Monitoring market evolution means that the technical implications of the evolution of market characteristics are captured and studied.
3. The case in which the center of excellence is located in the home country corresponds to the hub or
central model of innovation [2]. Here emphasis is
given to the cases in which such center of excellence is located abroad.
4. This stylized view of the R&D project does not
mean that the process is linear and sequential. Here,
the main logical steps that take place during an
R&D project are identified. They continuously
overlap each other, and feedback or feed-forward
systems help modify the project characteristics in
terms of content and/or organization.
5. The amount of resources left for local innovations
varies from firm to firm, but may still be a significant part of them. It is difficult to give percentages
and the managers interviewed were reluctant (maybe for confidentiality reasons) to provide numbers.
The impression is that the desire to keep a certain
autonomy and to manage autonomously the resources dispersed is still a strong factor against full
integration of activities at global level. As explained later, the problem concerns development
activities rather than research activities. However,
the distinctive characteristic of this structure is that
there is a global supervision and coordination.
When opportunities are identified to develop global
products, the supervisor unit explores the potential
for units to cooperate each other and carry out
innovation jointly.
6. The organizational history and the administrative
heritage is at the origin of the dispersion of resources. Firms with a strong tradition of decentralization give subsidiaries strong autonomy. This favors the creation and development of autonomous
R&D resources in foreign locations.
7. Concentration would mean to increase the efficiency of the structure but also to rationalize the
References
1. Bailetti, A. J. and Callahan, J. R. The Coordination Structure of
International Collaborative Technology Arrangements. Proceedings of
the R&D Management Conference Managing R&D Internationally
Manchester (July 1992).
2. Bartlett, C. A. and Ghoshal, S. Managing Across Borders. The Transnational Solution. Boston: Harvard Business School Press, 1989.
3. Behrman, J. N. and Fischer, W. A. Overseas Activities of Transnational Companies. Cambridge, MA: Oelgeschlager, Gunn & Hain,
1980.
4. Brockhoff, K. K. L. and Schmaul B. Organization, autonomy, and
success of internationally dispersed R&D facilities. IEEE Transactions
on Engineering Management 43(1):3340 (1996).
5. Casson, M. Global Research Strategy and International Competitiveness. Cambridge, MA: Basil Blackwell, 1991.
6. Chiesa, V. Managing the internationalization of R&D activities. IEEE
Transactions on Engineering Management 43(1):723 (1996).
357
358
V. CHIESA
Appendix A
It is the case of Nissan, the Japanese car manufacturer, who developed a minivan to be commercialized initially
in U.S. and then globally. The product was conceived first for the U.S. market as it was the largest. Moreover,
it could provide the required market knowledge. The product was produced and commercialized in U.S. jointly
with Ford. However, the product development was entirely carried out by Nissan. This was the result of a
transnational project involving the Technical Centre at the headquarters and the three technical centers of Nissan
in US, the Nissan Design International in California, the Nissan Research and Development in Michigan, and the
Nissan Motor Manufacturing Centre in Tennessee. The U.S. subsidiary was responsible for the styling (Nissan
Design), stamping (Nissan Motor Manufacturing), and engineering (Nissan R&D), whereas engines and transmission systems were developed in the home country labs.
The product concept was defined in U.S., and Nissan accessed market information collected on the minivan
market by Ford. Nissan also did surveys in Japan and on a smaller sample of car drivers in Europe. The product
development process took over 4 years. A strong effort of standardization was done in advance to ensure that
there was coordination among units. Quality and design standards were fixed, the elements defining the
characteristics of a generic project task were defined, common procedures were used to transfer technologies and
especially design works. The centers shared one design system and one CAD-CAM system. The development
phase involved also about 200 U.S. suppliers, operating in a simultaneous engineering approach. Nissan
succeeded in establishing Japanese-style relationships with part suppliers. To this end, it was fundamental the
approach taken in the establishment of R&D facilities in U.S. that is explained below.
A project committee was established to coordinate works, take key decisions and solve conflicts. The initial
part of the work was carried out at the various locations, although there were frequent reciprocal visits (on the
average two in a month). In the second half, mostly the engineering phase, a group involving people from the
various centers established in the U.S. lab.
This project was the first carried out by the U.S. subsidiary and the home country jointly. The organization was
appropriately shaped to ensure that there was collaboration among units. When the American technical centers
were established, Nissan sent few Japanese researchers and mostly recruited people locally. The (few) Japanese
researchers sent to the U.S. lab were very well known and had a very good reputation at the home country center.
This gave the foreign unit credibility within the corporation. They spent time at local Universities and research
institutes. This favored the establishment of first forms of collaborative research with local institutions. In the
meanwhile, many U.S. technicians and researchers were recruited and employed at this unit. This facilitated the
establishment of good relationships with local actors, such as, in particular, part suppliers that play a key role in
product development (as mentioned above, this allowed to establish Japanese-style customer-supplier relationships in the product development, involving suppliers in a simultaneous or black box engineering approach). As
part of the training period, U.S. technicians were sent to the Technical Centre in Japan. On the one hand, this
allowed to make them familiar with development systems and procedures used at the headquarters; on the other
hand, it enabled the firm to bring in creativity from the interchange of different approaches. The long term
objective was that of establishing a lab well interfaced with the home country centers able to bring in the
creativity and the effectiveness of the U.S. research and technology system.
Appendix B
Another example of network structure is the case of a white goods manufacturer, who recently decided to increase
the coordination of its R&D activities in the areas of production process technologies. In the past, each plant and
the annexed technical development activities were allowed to carry out their own technical projects. This brought
to duplication of efforts and resources. The decision was to establish a body to coordinate R&D activities in
production process technologies. This coordinating body (Technology Committee) provides leadership and clear
directions for the projects of global interests. The Technical Committee is composed of headquarters top
managers, representatives of each region and CTOs of the labs around the world developing new process
technologies. At the moment, its scope encompasses the (five) key production process technologies that are used
at the firms plants. Every year, projects of global interests and with great potential (which means that they aim
359
at improving key parameters of the concerned process) are proposed by the various subsidiaries and few are
selected. These are carried out jointly by different labs and usually the proposing lab has the leadership and hosts
the project. People from the other labs are moved to the leading lab. The process technology developed during
the project, if successful, is then implemented at global level in each plant using that technology. The first global
project concerned the casting technology and was assigned to the Brazilian subsidiary.
The projects are selected and directly supported by the Technical Committee that are chaired by a top manager
of the home country. Subsidiaries are motivated to have global projects assigned as this brings credibility and
importance within the corporation and higher amount of resources to manage. Non-leading subsidiaries are
willing to involve their own people to affect the project and to ensure that results can be of use for them. Given
that the responsibility varies from project to project, subsidiaries are forced to collaborate to ensure that when
they lead projects, they can rely on the collaboration of technical people from other subsidiaries. Moreover, the
involvement of technical people of the various labs and subsidiaries in the projects facilitates the transfer of the
project results to the various plants for their implementation.
The next step (not implemented yet) is that of assigning the responsibility for the progress in each technology
to one lab favoring a process of specialization of the labs. In other words, the objective is that of moving to a
center of excellence structure.
Appendix C
It is the case of the development of Mondeo, the global car of Ford. The idea of a global car came in mid 80s
as the company recognized that requirements in the various areas of the world were converging and there were
the opportunities to exploit new products globally. Moreover, there were opportunities from the exploitation of
the knowledge, experience and specialization of both the European and the U.S. R&D centers. Therefore a project
was launched with the objective to generate a model that had to substitute both the Sierra model in Europe and
the Tempo in U.S. with one car to be commercialized on both markets. The project started with the assessment of the
requirements and a benchmarking exercise with other car models to identify key parameters and their degree of
satisfaction. Then, a survey on thousands of car drivers in triadic countries was done to identify the areas where to
stretch car performance. A project was defined and the global car project started its development phase.
Ford Europe had the leadership of the project, as the car concept was more similar to that of an European car.
Gand, the largest assembly center of Ford in Europe, where the Mondeo had to be produced, was selected as the
location of the project leadership and coordination center. The project was transnational. The project coordination
was achieved through project committees at various levels: working groups operating on specific technical
problems, Program Control Group composed of the chairmen of the working groups and the Product Committee
chaired by the President of the Ford Europe. There was a coordination group (50 people), responsible for keeping
communication and relationships among the groups, which ensured that the works were consistent each other.
Also suppliers were selected on a global basis: 47 were European and 20 American.
The work among units was divided on the basis of the specialization of the units.
In the product design phase, they were involved groups in Dearborn, U.S. (6V engine and transmission),
Merkenich, Germany (aesthetic design and 4 cylinders engines), Dunton, U.K. (interiors package). However,
technical people were mixed (35 American technicians worked in European labs).
In the prototyping phase, they were involved plants responsible for developing the production processes for
new products and pilot plants. Again the responsibilities were assigned on the basis of the specialization of the
units: Bridgend (Wales) for 4 cylinders 1.6 and 1.8 engines, Dagenham (U.K.) for diesel engines, Cleveland
(Ohio) for 6 cylinders engines, Chihuahua (Mexico) for 4 cylinders 2.0 engines. The development of processes
was supported by the use of CAD-CAM systems that were shared with the product designers.
In both design and prototyping phases, the coordination of the works took place through a wide use of
teleconferencing and telecommunication systems. The coordination of the R&D work changed during the
engineering phase. The engineering phase was conducted in Gand by engineers coming from the various units
involved in previous stages: the co-location was necessary. The Gand team was then partially transferred to
Kansas City to take care of the engineering pre-production phase in US.
The Mondeo was presented at the Geneve exhibition in 1993, in U.S. it was introduced 15 months later. In
Japan it was commercialized through a joint venture with Mazda.