Creativity should not be stifled

Central power

The debate on whether multinational enterprises (MNEs) should centralise or decentralise power in global operations in areas such as marketing and human resources has an equal bearing on the future success of their R&D operations.

by International Journal of Technology Management
Last Updated: 23 Jul 2013

Increasingly, MNEs exploit the tool of foreign direct investment to acquire new knowledge across the globe. In a sample of US firms (1994-2000), for example, the average growth in industrial R&D spending overseas was 11%, significantly higher than the 8.4% increase in domestic spending.

Those firms that centralise their operations in R&D through common procedures run the risk of stifling the creativity of their scientists and engineers.

The study showed that bureaucratic controls demotivate researchers, so it is important for MNEs to consider how far they should centralise such areas of their business. Companies with dispersed R&D innovation operations produce better performances, provided there is a good constant communication flow between researchers and managers.

Performance implications of organisational structure and knowledge
sharing in multinational R&D networks
Chris W Grevesen and Fariborz Damanpour
International Journal of Technology Management, 2007 Vol 38 Nos 1/2

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