The coordinated network company places priority on innovation networks and the management of R&D/technology as key factor in worldwide innovation. OVERVIEW: Increasingly, multinational enterprises face simultaneous pressures for global integration and local responsiveness. Both management theorists and managers believe that, to respond to this challenge, the international company should be managed as coordinated network. This model insists on the relevance of an international innovation network, on global management of technology, and on the capability to leverage the best elements of each location to global benefit. This implies that companies disperse their R&D facilities in different countries to much larger extent than in the past. An R&D structure should be designed to fulfill three main tasks: constituent technology development, product development, and technical support to other functions. The drivers of internationalization, the locational determinants, and the management processes are unique to each task. For 20 years, we have witnessed the globalizing of competition in many industries. In the early 1980s, studies of international competition identified broad range of models. At one end, there is the multidomestic competitive model, in which competition in one is independent of competition in other At the other end, there are industries in which competition is seen as global, and a company's competition position in one is greatly influenced by its position in another country (1). Companies have come to recognize that each strategy has its weaknesses. The multidomestic approach tends to reproduce many operations of company's value chain in each country, making it impossible to capture the synergies linked to that company's presence in different A purely global strategy is vulnerable to fluctuating exchange rates and to political volatility. Companies have thus been searching for new and different models of competition. Prahalad and Doz point out that multinational companies should strike balance between global integration and the capacity for local response (2). Integration refers to the management of geographically dispersed operations, whereas strategy based on local response tends to push resource allocation decisions down to subsidiaries. A combination of these strategies requires strategic coordination, which Prahalad and Doz define as: centralized management of the processes of allocating resources to number of countries. Here, the multinational company is seen as centrally coordinated network. This means that each facility is considered contributor to the company's global earnings, specializing the roles of the individual subsidiaries, fine-tuning different strategic perspectives, coordinating geographically dispersed capabilities and resources, exploiting the company's presence in different locations, and sharing globally both technological and market know-how (3,4). Different names have been given to these new organizational forms of multinational company: the multifocal company (2), the transnational firm (3), the heterarchical organization (5), the horizontal company (6). I shall refer to this organizational and competitive model as the coordinated network company. The coordinated network model emphasizes the role of innovation networks and the management of global R&D and technology as key factor in worldwide innovation. The Process of Internationalizing R&D The recent growth of international competition and the globalization of scientific and technological operations have forced companies to disperse their R&D operations in different countries and to design, put in place and manage an R&D infrastructure globally, so as to improve their capacity for technological innovation. Companies that adopt the purely global model generally concentrate their operations in one or more …
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