Management Control and the Decentralization of R&D

Abstract

The authors investigate organizational conditions influencing the allocation of decision rights made by headquarters of multinational corporations (MNCs) to their foreign R&D subsidiaries. The authors draw on the logic of management control theory to build their conceptual model and then develop this model using arguments from the R&D and time use literatures in order to test the direct and indirect effects of advanced R&D processes within the subsidiary. They find that control theory makes correct predictions in terms of three organizational conditions, namely, research nature, information asymmetry, and interdependencies, but not in terms of social controls. In addition, the authors uncover a significant interaction between research nature and advanced R&D processes that indicates a breakdown in control logic in situations of high time pressure and intense R&D effort. Their study extends the body of literature on organizational conditions that influence how R&D decision rights are allocated in the MNC by drawing attention to the task environment in the locations where R&D is performed.

Tensions at the intersection of management control and innovation: a literature review

“…Eisenhardt 2000; Lewis and Smith 2014;Gaim and Wåhlin 2016), was clearly used in two articles (Carter et al 2013; Aubert et al 2015). Besides these four theoretical approaches, a number of other theories were used as a theoretical lens in the articles, including motivation theory (Adler and Chen 2011), organization theory (Artto et al 2011), management control theory (Ecker et al 2013), innovation management theory (Breunig et al 2014), and network theory (e.g. Revellino and Mouritsen 2009).…”

Encouraging emergence of cross-business strategic initiatives

“…In the case of subsidiaries within multinational firms, past initiatives contribute to its bargaining power, and how HQs respondthrough granting attention or monitoring -affect the realization of the subsidiary's goals (Ambos, Andersson, & Birkinshaw, 2010;Birgitte, 2011). However, most autonomous strategic initiatives are trumped by the firm's articulated strategy and structure (Ecker, Van Triest, & Williams, 2011;Kleinbaum & Tushman, 2007). In the specific context of cross-business unit collaboration, Martin and Eisenhardt (2010) argue that business unit-centric processes were more likely to lead to high-performing cross-business unit collaboration than "top-down" corporatecentric decisions.…”

Foreign Subsidiary Competitiveness: The Key to a Multinational Corporation’s (MNC) Global Growth

“…These demands can be in the form of improving value chain efficiency, product and process innovations and refinements, better strategic directions, better positing in the marketplace, and redefining the scope of its businesses and regions (Ecker, Van Triest, & Williams, 2013).…”

“…Strategic vision must be matched by an appropriate organizational culture that would correctly channel the activities and resources of the organization (Griffith, Kiessling, & Dabic, 2012;Karabell, 2010). It is important to see that changing an organization's strategy and culture should focus on a comprehensive approach that addresses all aspects of the organization, including research and development (R&D) among the foreign subsidiaries (Ecker et al, 2013;Mezias, 2002;Kono, 1997;Schneider, Brief, & Guzzo, 1996;Suutari & Burch, 2001). Further, organizational culture itself can drive changes in corporate strategy (Morgan, 1993;Trice & Beyer, 1993).…”

“…It should not pursue "goal-lock" approaches, but instead, should keep its options flexible. It should pursue activities that make the organization's internal sub-systems (e.g., marketing, R&D, operations) more agile, adaptive, and pro-active (Ecker et al, 2013). For example, it should pursue short-term, contingency planning rather than longer-term planning, thus making the organization more agile and adaptive focusing on developing better boundary spanning skills among its sub-systems that are in direct contact with their external sub-environments.…”