5 - Creating Worldwide Innovation and Learning Flashcards
(27 cards)
What are the 3 key capabilities of businesses when it comes to innovation?
- Sensing
- Responding
- Implementing
What are the 2 classic processes of innovation?
Center-for-global and local-for-local innovation
What is center-for-global innovation?
- Headquarters senses opportunities
- New products are created by the centralized assets and resources of the parent company
- Implementing strategy is decided centrally and executed locally
Found in international and global companies
What is local-for-local innovation?
- National units sense local needs
- Distributed assets and resources allow for local response
- Local-for-local implementation
Found in multinational companies
What are the issues associated with the center-for-global model of innovation?
- Risk of market insensitivity
- Imperialism
- Competitive advantage of home market may fade
- Resistance of local subsidiary management
What are the issues associated with the local-for-local model of innovation?
- Risk of duplication
- Inefficient
- Reinventing the wheel
What are the 2 main factors of transnational innovation?
Locally leveraged and globally linked
What does it mean for transnational innovation to be “locally leveraged”?
The special resources and capabilities of each subsidiary are available to other units as well.
Ex: Nokia’s Indian operations became a source of global expertise in mobile phone retail
What does it mean for transnational innovation to be “globally linked”?
The resources and capabilities of many units are pooled to jointly create and manage an activity
Ex: P&G detergent used technology strengths from Europe, Japan, and US markets
What are the 4 main barriers to collaboration and when do they occur?
- Not-invented-here: Occurs when a seeker of help is unwilling because the innovation wasn’t created at their subsidiary
- Hoarding-of-expertise: Occurs when a potential provider of help refuses because they want to keep their IP
- Needle in the haystack: occurs when a seeker of help is unable to get it because they can’t find a source of assistance
- “Stranger” problem: Occurs when a provider of help is unable to help because the units or people are unfamiliar with each other
What are the major management levers to promote collaboration?
- Leadership values and goals
- HR procedures
- Lateral cross-unit mechanisms including benchmark systems, experts, and connectors
What are the 3 simplifying assumptions made about multinational enterprises?
- Subsidiaries should be symmetrical
- HQ-subsidiary relationships are based on clear patterns of dependence and independence
- Corporate management exercises decision-making and control uniformly
How does transnational innovation break the assumption of symmetrical subsidiaries?
Moves from symmetry to differentiation as demands for integration and responsiveness must be assessed separately for each business, function, and region
How does transnational innovation break the assumption of dependence/independence?
Moves from strict dependence relationships to interdependence where an integrated network of dispersed and specialized resources and inter-unit integration mechanisms are created
How does transnational innovation break the assumption of simple management control?
Moves from simple control to flexible coordination. There is a complex coordination of the flow of resources and knowledge following the formalization, centralization, and socialization process
What is reverse innovation?
Developing a product for a market in an emerging economy and then selling that product in developed markets
Why is reverse innovation important?
Many emerging markets are no longer small and have high growth rates
Local companies can enter developed markets with low-cost alternatives
Fixes glocalization’s problem of ignoring faster growing middle and lower-end customer segments in emerging markets
What are the conflicting needs that make reverse innovation difficult?
Reverse innovation requires decentralization but centralized structures provide cost benefits that the business may need so the 2 models must cooperate
How is the foreignness of a company becoming a liability in China?
Only 18% of Chinese university students want to work for a foreign company
R&D positions at Chinese companies tech companies are more attractive due to equal or greater benefits than foreign companies as well as better cultural understanding
How is China’s strengthening IP policy impacting multinational enterprises?
China now has specialized IP courts which rule on disputes and may act more favorably toward Chinese companies
The number of patent application in China is rising which reduces the ability of a company to develop technology without infringing on some other rights
Why are MNEs struggling with whether or not to share technology with China?
There is growing market pressure to transfer technology and conduct R&D in order to survive but transferring the tech makes Chinese competitors stronger so they may surpass youq
In what way do Chinese companies have an advantage when it comes to transaction costs?
One of the biggest challenges for MNEs operating in China is transparency, predictability, and fairness of regulation. Chinese companies do not experience the same troubles because they have close relationships with government officials
How is China impacting MNE feelings surrounding time to market?
China tends to have faster time to market, development cycles are becoming faster. Companies can no longer have strict internal processes or stringent quality standards that slow them down
How can MNEs reduce the issue of the growing liability of foreignness in China?
Have adequate local faces in management positions
Reorient company culture to correct false perceptions about the ability of the Chinese to innovate
