Chapter 10-2

Discussion Questions
November 22, 2012
POSTECH Strategic Management of Information and Technology Laboratory
Dept. of Industrial & Management Engineering
Discussion Questions
■ Chapter 10. Organizing for Innovation
3. What factors should a firm take into account when deciding how centralized its R&D activities
should be? Should firms employ both centralized and decentralized R&D activities?
Value of taking advantage of economies of scale
Opportunity to divide labor across a broader pool of R&D specialists
Importance of tapping local knowledge resources
Degree to which the divisions of the firm are likely to benefit from sharing innovations across
– Degree to which innovations will require substantial customization for the local market
– Cost of coordination and communication across the divisions
– Most organizations can benefit from some combination of both centralized and decentralized
R&D activities, as a function of the importance of the previously mentioned factors,
however the cost of coordinating the combination of centralization and decentralization must
be taken into account
Discussion Questions
■ Chapter 10. Organizing for Innovation
4. Why is the tension between centralization and decentralization of R&D activities likely to be
even greater for multinational firms than firms that compete in one national market?
– Because of the greater magnitude of the differences between divisions
– Characteristics of foreign markets
– Likely to have diverse product needs, different operating norms, and even different legal and
institutional structures
– Often being source of diverse information and other resources
– Physical and cultural distance between markets
 It is more likely the innovations developed in decentralized local markets will not be
diffused to other divisions or the customization that made a product attractive in one
market may make it difficult to transfer to another
 A greater likelihood the product will be met with the “not invented here” syndrome

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