R&D in Multinationals Professor Michele Cincera Group Assignment Group 10 Giuseppe Ciccone & Christian Hauschildt Academic year 2007/2008 R&D IN MULTINATIONALS Group Assignment Group 10 - 2007/2008 Giuseppe Ciccone & Christian Hauschildt Table of content TABLE OF CONTENT ........................................................................................................................................................2 FIGURES ..........................................................................................................................................................................2 TABLES ...........................................................................................................................................................................2 THE ARTICLE ..................................................................................................................................................................3 1. Introduction ...........................................................................................................................................................3 2. Conceptual framework ..........................................................................................................................................4 3. Data and method ...................................................................................................................................................6 4. Questionnaire results.............................................................................................................................................6 5. Qualitative analysis ...............................................................................................................................................7 6. Conclusion...........................................................................................................................................................10 TOYOTA .....................................................................................................................................................................12 Innovation towards a sustainable society................................................................................................................12 R&D at TOYOTA.....................................................................................................................................................13 Facts about R&D at Toyota.....................................................................................................................................16 Organizational tension in international R&D management: why Toyota ...............................................................17 R&D internationalization – Toyota Motor Corporation .........................................................................................18 APPENDIX 1...................................................................................................................................................................22 APPENDIX 2...................................................................................................................................................................23 Figures FIGURE 1: HEADQUARTER -CENTERED MODEL ......................................................................................................................4 FIGURE 2: SUBSIDIARY -CENTERED MODEL ..........................................................................................................................4 FIGURE 3: PERCEPTION GAP AND (DIS )SATISFACTION ..........................................................................................................6 FIGURE 4: STAGES AND TRANSITIONS ..................................................................................................................................8 FIGURE 5 AUTONOMY-INFORMATION TRADE -OFFS ..............................................................................................................9 FIGURE 6: MOBILITY , PEOPLE AND SUSTAINABILITY .........................................................................................................13 FIGURE 7: TOYOTA ’S R&D LABS AROUND THE WORLD .....................................................................................................14 FIGURE 8: R&D INTERNATIONALIZATION ..........................................................................................................................18 Tables TABLE 1: TENSION ACCORDING TO EVOLUTIONARY STAGE ...............................................................................................10 TABLE 2: R&D INVESTMENTS ............................................................................................................................................17 R&D in Multinationals - Professor Michele Cincera 2 R&D IN MULTINATIONALS Group Assignment Group 10 - 2007/2008 Giuseppe Ciccone & Christian Hauschildt Introduction Organizational tension between a company’s R&D headquarters and its internationally based R&D facilities is a relatively new and unexplored topic as internationalization of R&D facilities has only really begun over the past two to three decades, especially for Japanese companies . This paper will summarize Kazuhiro Asakawa’s article “Organizational tension in international R&D management: the case of Japanese firms” and draw out the conclusions made by author. After the summary, there is an introduction about Toyota and its R&D facilities around the world, including what the different facilities do. Finally, using the models, theory and conceptual framework from the article, Toyota’s internationalized R&D facilities are analyzed, mainly focusing on the facility in Belgium. The Article The article is entitled “Organizational tension in international R&D management: the case of Japanese firms” and was written in 1999 by Kazuhiro Asakawa and was accepted for publication in 2000. The article summary takes a rather large amount of place in the paper as the article contains a lot of concentrated information, which has to be included in order to maintain the logic that the following sections are built upon. The article consists of six main sections; these are kept as they are in the article, because otherwise the structure of the analysis upon which the article is based would be lost: 1. Introduction 2. Conceptual framework 3. Data and Method 4. Questionnaire results 5. Qualitative analysis 6. Conclusion The summary focuses on each of these sections separately, however in sections 3 through 5 the focus is put on the findings rather than the data collection method and the statistical analysis of the collected data, as this is viewed as irrelevant to the assignment. The article states the following: 1. Introduction Internationalization of R&D facilities and the tension that arises as a result of this is a topic that has not been explored a great deal. The recent internationalization of these R&D facilities has created severe tension between companies’ headquarters and the labs around the world. These tensions arise as a consequence of different needs from the two sides. Headquarters often wants to coordinate and control the overseas labs, where as the labs want more autonomy to encourage and create more innovative thinking and ideas. A problem arises because labs with strong internal linkages to the headquarters are focus on what is going on in the company; where as companies without this strong internal linkage often links better externally; to the local science community, which enables the lab to tap into knowledge contained within the local science communities. The lack of balance between the internal and external linkages creates autonomy-control issues between the local labs and the headquarters. If there is no linkage between the lab and the local science community, there is no point in having that international R&D facility. On the other hand, if the external link to the local science community is too strong, then the internal linkage is weak and as a result, the objectives of the company may be lost. Japanese companies have for a long time been viewed as successful in avoiding these tensions, because they have been strong ethnocentric “clans”, however when R&D is no longer in the home nation and the foreign labs are controlled and managed by locals, this streamlining of efforts and information is lost. This is particularly the case in basic research (R). The article looks at how this loss of ethnocentricity in throughout the company unleashes problems in understanding the other parts needs and wishes, both as far as autonomy and information sharing R&D in Multinationals - Professor Michele Cincera 3 R&D IN MULTINATIONALS Group Assignment Group 10 - 2007/2008 Giuseppe Ciccone & Christian Hauschildt is concerned. Furthermore it analyses how these facilities evolve over time and how and when the tension arise. 2. Conceptual framework This section talks about the three main problems causing tension between the overseas labs and the headquarters. Autonomy-control perspective The two extremes of autonomy-control are: 1) The headquarter-centered MNC model of global R&D linkages (Figure 1). 2) The subsidiary-centered MNC model of global R&D linkages (Figure 2). Figure 1: Headquarter-centered model Figure 2: Subsidiary-centered model As it is clear from these figures, the two models are very different. In figure 1, the link between the headquarters and the subsidiary (overseas lab) is very strong, but as a result