Global R&D offers fresh challenges for companies

As R&D becomes more global, companies are facing new management challenges, a survey by INSEAD and Booz Allen Hamilton finds.

by Booz Allen Hamilton; INSEAD
Last Updated: 23 Jul 2013

The research revealed that 77% of new R&D sites planned for the next three years would be established in China and India. Only two years ago, both countries only made up 13.9% of foreign sites, up from just 3.4% in 1990. Combined, China and India are now on the brink of overtaking Western Europe as the most important location for foreign R&D for US companies.

As innovation 'goes east', Eastern Europe is also benefiting, picking up interest for its cheap, highly skilled workforce. China on the other hand, attracts companies in search of new markets and cheap labour.

Yet despite this spur of foreign R&D activity, few companies have the management in place to support such networks. Companies surveyed reported that almost a quarter of their foreign sites did nothing but customise products and services to local markets. Truly global innovations were also limited, with only a third of all projects undertaken across multiple sites.

"The survey shows that technological innovators get a significant advantage by sensing knowledge more globally," said Thomas Goldbrunner, principal and co-lead of the survey for Booz Allen Hamilton. "This includes the exploitation of knowledge about customer needs and technologies from multiple locations for idea generation and advanced projects."

The research also showed that most companies believe that multi-cultural experience performs better in virtual teams. Yet few seemed to be developing a workforce with such skills.

Source: Innovation: is global the way forward?
Booz Allen Hamilton; INSEAD

Review by Emilie Filou

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