Establishing Foreign R&D Units: The Case of Small Multinational Corporations (sMNCs) in China

Small multinational corporations (sMNCs) and their quest for internationalization of R&D have attracted little research attention. Our study focuses on sMNCs from Germany within the electrical, machinery and automotive industry investing in R&D in China. Based on an empirical study of 36 interviews in 19 sMNCs with R&D in China, we analyze motivations, barriers, operational challenges, and establishment procedures of sMNCs in China. We formulate 18 propositions summarizing the three main findings that a) strategic motivations and barriers distinctively differ from traditional MNC-type R&D internationalization in China; b) managerial challenges of local R&D activities are different for sMNCs, c) the establishment process for R&D units is similar, i.e. identical in speed but different in scale and capacity. We conclude with general implications for sMNCs establishing global R&D sites.