Maximilian Von Zedtwitz

After more than a decade of widespread global R&D expansion, top managers in multinational companies take decentralized competencies for granted, expecting their international research and product development functions to deliver results. However, based on more than 150 in-depth interviews and case research carried out with 18 multinational companies from three industry groups between 1996 and 2000, we have identified six fundamental dilemmas that make it difficult even for companies with carefully managed distributed R&D networks to exploit the full potential of global innovation. In addition to a root-problem analysis, we surveyed these companies about the drivers of R&D globalization, and how these drivers would affect their organizations over the next 10 years. Although some of the trends that emerged are industry specific with regard to technology development, we describe five common traits that are expected to shape R&D organization in the mid-term future.

The past years have seen a decentralization of R&D to local markets and centres-of-excellence. Supported by modern information and communication technologies, ‘virtual project teams' were formed to facilitate transnational innovation processes. With their boundaries expanding and shrinking flexibly with changing project necessities, virtual teams are believed to be an important element in future R&D organization. Based on 204 interviews with R&D directors and project managers in 37 technology-intensive multinational companies we identify four distinct forms of virtual team organizations used to execute R&D projects across multiple locations. Ordered by increasing degree of central project coordination, these four team concepts are based on: (1) decentralized self-organization, (2) a system integrator as a coordinator, (3) a core team as a system architect, and (4) a centralized venture team. Our contingency approach for organizing a transnational R&D project is based on four principal determinants: (1) the type of innovation (radical/incremental), (2) the systemic nature of the project (systemic/autonomous), (3) the mode of knowledge involved (tacit/explicit), and (4) the degree of resource bundling (complementary/redundant). According to our analysis, the success of virtual teams depends on the appropriate consideration of these determinants.

Insufficient technology transfer between research and its customers is one of the key weaknesses in industrial R&D. Since knowledge transfer to development and other corporate partners is the only raison d'etre for industrial research, R&D management should place more emphasis on developing the transfer capacity of its researchers. Based on analysis of more than 200 research interviews in 62 companies, we focus on the management interface between research scientists and development teams. We identify five principal dilemmas for managing customer oriented research: the short/long-term dilemma, simultaneity and uncertainty, surrender of project ownership, technocentricity and need fulfilment, specialisation and integration. These concepts are illustrated with five examples of R-to-D management at Siemens, ABB, General Electric, EGU, and Rolic. Although geographical, functional, and socio-behavioral distances call for a stronger consideration of research-development integration, research must retain a sufficient degree of independence. We propose a transfer oriented model for managing the R-to-D process, from what is possible to what is necessary. Aligning research activities with market requirements may be the only survival strategy for many corporate research centres.

Research and development are subject to different location drivers. The analysis of 1021 R&D units, each distinguished by its main orientation towards either research or development work, reveals that research is concentrated in only five regions worldwide, while development is more globally dispersed. Our research is based on 290 research interviews and database research in 81 technology-intensive multinational companies. We identify two principal location rationales-access to markets and access to science-as the principal determinants for four trends that lead to four archetypes of R&D internationalization: ‘national treasure', ‘market-driven', ‘technology-driven', and ‘global'. Their organizational evolution is characterized by four trends. The model is illustrated with short cases of international R&D organization at Kubota, Schindler, Xerox, and Glaxo-Wellcome. Differences in R&D internationalization drivers lead to a separation of individual R&D units by geography and organization. Current belief is to integrate R&D processes; separation seems to contradict this trend. We argue that this need not be the case, for there are good reasons to maintain some independence between research and development.