Enhancing Synergistic Innovative Capability in Multinational Corporations: An Empirical Investigation

A substantial amount of research has focused on determining and classifying the structures of the global research and development (R&D) organization of multinational corporations (MNCs). However, little research has been undertaken to show how the various R&D structures adopted by MNCs affect their abilities to generate and deploy innovations globally. This study initiates analysis and discussion of this latter dimension, providing empirical evidence of the relationship between the coordination structures and innovative capabilities. Specifically, this study investigates how intrafirm collaborative relationships among globally dispersed R&D units of MNCs enhance the synergistic innovative capabilities of the MNC group. The nature of the collaborative relationships among globally dispersed R&D units is evaluated in the context of four well-established structural constructs: autonomy, formalization, socialization, and communication. Synergistic innovative capability is defined as a higher-order ability to accumulate and deploy new knowledge or to recombine existing knowledge to create new innovations more effectively and efficiently due to collaboration among globally dispersed R&D units. It is measured using 10 items commonly used in innovation management research to measure the innovativeness of firms. The analysis is based on survey data collected from 79 R&D units belonging to North American, Japanese, and European MNCs in the telecommunications, biotechnology, pharmaceutical, chemical, and automotive industries. In addition to the survey data, seven highly experienced R&D executives who have worked for several companies were interviewed by telephone in order to obtain a richer perspective of issues and a better context from which to interpret the statistical results. Respondents included personnel from the levels of director, managing director, and vice president who were directly responsible for participating R&D units. The data were analyzed using partial least squares, a structural equation modeling technique that works well with small datasets. The results indicate that synergistic innovative capability has four distinct dimensions uniquely related to the structural variables defining the nature of collaborative relationships among globally dispersed R&D units. The four dimensions of synergistic innovative capabilities are labeled strategic R&D synergy, managerial and operational synergy, knowledge management synergy, and innovative proficiency synergy. The research and managerial implications of the findings are discussed in this article.

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