Building effective R&D capabilities abroad.

Abstract

In the past, companies kept most of their research and development activities in their home country because they thought it important to have R&D close to where strategic decisions were being made. But today many companies choose to establish R&D networks in foreign countries in order to tap the knowledge there or to commercialize products for those markets at a competitive speed. Adopting a global approach entails new, complex managerial challenges. It means linking R&D strategy to a company's overall business strategy. The first step in adopting such an approach is to build a team to lead the initiative--a team whose members are sufficiently senior to be able to mobilize resources at short notice. Second, companies must determine whether an R&D site's primary objective is to augment the expertise that the home base has the offer or to exploit that knowledge for use in the foreign country. That determination affects the choice of location and staff. For example, to augment the home base laboratory, a company would want to be near a foreign university; to exploit the home base laboratory it would need to be near large markets and manufacturing facilities. The best individual for managing both types of site combines the qualities of good scientist and good manager, knows how to integrate the new site with existing sites, understand technology trends, and is good at gaining access to foreign scientific communities. As more pockets of knowledge emerge around the globe and competition in foreign markets mounts, only those companies that embrace an informed approach to global R&D will be able to meet the new challenges.