Siemens Case Study

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According to (OECD, 1996), today’s world economy has been described as “Knowledge-Based Economy” with knowledge being the most crucial resource and learning being the most important process. Therefore, it is essential not only for businesses to encourage innovation and research and development (R&D) in order to compete successfully.
This paper draws on a case study of how Siemens had been globalizing/decentralizing R&D since the 1980s. Siemens, a German company is one of the largest electrical engineering & electronics companies in the world with R&D being conducted in 33 countries today.

This chapter gives an insight on international strategy and how innovation plays a critical role for Multinational Enterprise
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As at fiscal year 2015, Siemens spent EUR 4.5 billion on R&D, with 32,100 R&D employees and 7,650 inventions, these figures demonstrate the power of innovation at Siemens ( R&D today is being conducted in 188 locations around the world in 33 countries, 92 in Europe, 69 in US and 27 in Asia.
Siemens Corporate Research (SCR) located in Princeton, New Jersey follows Kuemmerle’s home-base exploiting (HBE) model in that it was the first research institute outside Europe that was established to support US manufacturing operations. While Corporate Technology (CT) India can be categorized as home-base augmenting (HBA) site. In line with the MNE’s objective which was “to establish a leading industrial research center, which will attract the best talent, promote corporation with universities and research facilities, and allow Siemens to tap into India’s strengths, particularly with regard to Information Technology”, as stated in (Verbeke, 2013), Siemens opened CT India in Electronics City which is a major industrial park in Bangalore and the location of other multinational companies such as 3M, Hewlett Packard and other local Indian giants such as Infosys to meet these objectives and this was the rationale for the choices of the lab’s location. Mukul Saxena was given the mandate to establish this new research site and his priorities did not
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Creative research may require local autonomy but a certain degree of control is required to maintain organizational unity (Ambos, Akawa & Ambos C, 2011). Siemens objective to establish a leading research center following the HBA model was not Saxena’s priority. He wanted to follow the HBE model first then gradually become embedded as an insider in the Indian market. (Ambos et al, 2011) suggests that extensive autonomy may break internal consistency as a company and on the other hand may stifle local creativity, balance between autonomy and control becomes necessary. Supported by (Mudambi, 2011), ownership rights and control rights exhibited by the MNE depends on the extent of asymmetric information between HQ and subsidiary. In cases where HQ is able to gain access to subsidiary’s local knowledge, its control is likely to be positive for the MNE but in cases where it does not gain such access, its control becomes a negative hindrance hence a drag on the MNE’s performance (Mudambi,
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