Chapter 5 Creating Worldwide Innovation and Learning:

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Chapter 5 Creating Worldwide Innovation and Learning:
Exploiting Cross-Border Knowledge Management
Focus on one of the most important current challenges facing MNE management-how to develop and diffuse knowledge to support effective worldwide innovation and learning

Central, Local and Transnational Innovation
Two classic processes dominate MNE’s innovative capabilities (traditional) * Centre-for-global innovation model–(International/global) * New opportunity sensed in home country * Centralized resources & capabilities of parent company brought to create new product/process (the main R&D center) * Implement through subsidiaries whose role is to introduce that innovation to their local market
Examples of this
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Empowering local management in national subsidiaries
Factors supporting local innovation * Dispersal of organizational assets and resources * Delegation of authority
Example: Nestle; Philips 2. Linking Local Managers to Corporate Decision-Making Processes * Feasible for subsidiary managers to be creative & entrepreneurial * Influence on managerial attitudes &organizational relationships
Example: Philips, career assignment pattern 3. Force tight cross-functional integration within each subsidiary
Subsidiaries use integration mechanisms at THREE organizational levels
(Take Philips for example) * Project-level: ‘article team’consists of relatively junior managers from the commercial & technical functions--resp. product policies, annual sales plans & budgets * Product-level: product group management team of technical & commercial representatives meeting once a month to review results, suggesting corrective actions, resolving interfunctional differences * Subsidiary-level: ‘local board’senior management committee consists of top commercial, technical& financial managers of the subsidiary

Making Transnational Processes Feasible
THREE simplifying assumptions block the organizational capabilities of managing transnational operations: [traditionally] 1. The role of different organizational units are uniform and symmetrical

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