Enabling international R&D units to evolve into contributors: the case of China

Abstract

The ongoing expansion of international research and development (R&D) activities, especially in China, provides multinational corporations (MNCs) with the major challenge of keeping a balance between headquarters (HQ) control and support for the local autonomy of subsidiaries, given the considerable cultural, organizational, and geographic distance involved. Based on 42 interviews, we first identify the most important coordination mechanisms. Based on these, we describe the evolution of R&D units over time and identify a number of enablers for successful coordination between HQ and the subsidiaries. Our findings suggest that these enablers not only positively affect the provision of adequate HQ support but also provide an opportunity to build up sufficient local competencies to allow local Chinese R&D units to develop a contributing role. Moreover, we find that global R&D organizations need to not only foster trust and mutual benefits between HQ and local teams but also clearly define the local units’ strategy and their role within global competency distribution. Global R&D organizations also need to allow local empowerment and employ suitable retention measures and local knowledge management structures as well as to ensure a balanced appraisal of achievements and the establishment of good organizational connections. All these elements will be integrated into a consistent development and review process that describes the evolution from HQ control to HQ support as well as local autonomy and competence development.