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5
Dec

International R&D Strategies for Developing Country MNCs

I recently came across two interesting articles on the important topic of international research and development (R&D) strategies in companies from developing countries.  Not surprisingly, both articles relied on survey data from China.

Zhang relied on in-depth case studies of R&D investments by Chinese companies in Europe and the US to analyze the international R&D strategies of those companies and found interesting differences based on the location of the investment activities.  In Europe, for example, Chinese companies were “more insulated from [the] local innovation system, getting access to good indigenous labor rather than local partners” and tended “to engage [in] less explorative and more exploitative R&D activity” that focused on adapting technologies self-developed for the European market.  In contrast, when Chinese companies became involved with R&D investments in the US they were much more interested in securing “long-term local embeddedness”.  Click here to download the article.

Zedtwitz used his investigation of a large sample of technology-intensive Chinese firms to learn more about how firms from developing countries are approaching outbound R&D investment and relied on his results to propose two concepts of international R&D strategies for such firms: “innovation capability enhancing”, which includes developing the capacity to “understand and conduct cutting-edge technology development by absorbing know-how from advanced countries”, and “innovation capability exploiting”, which includes exploitation of “technologies and technical know-how which has been absorbed earlier and refined for use in other developing countries”.  The results that Zedtwitz compiled from his sampling of Chinese firms led him to speculate that companies from developing countries will internationalize R&D into advanced countries to remedy shortcomings in their domestic technologies and enhance their long-term ability to compete technologically in foreign markets.  In addition, however, developing country firms are keen to engage in “opportunistic” R&D investments in other developing countries; first to fulfill the requests of local customers and then later to pursue, and hopefully achieve, long-term first-mover advantages in countries that are currently less privileged but which may ultimately emerge as important markets.  Click here to download the article. 

5
Dec

Technology and Organizational Effectiveness

Technology of some sort is applied at each step along the path of activities of a typical organization–input, conversion and output–and this month's report describes how the chosen and applied technologies can impact the creation of the organization's overall core competencies and potential competitive advantages.

5
Dec

A “Cultural Contingency” Model of Leadership

This report summarizes some of the ideas of Muczyk and Holt, who prescribed that global leaders should adapt to changing economic conditions, particularly the growing intensity of globalization, by aligning their leadership styles and processes with cultural demands.  They suggested a “global framework of leadership” based on four “leadership dimensions”—consideration, concern for production, incentive for performance and democracy-autonomy—and then went on to prescribe recommendations for effective leadership styles in various regions of the world based on the predominant cultural characteristics in those regions identified by various researchers.

5
Dec

Import and Customs Compliance Part II: An Introductory Primer

Last month I published a post announcing a program on Import and Customs Compliance that included a copy of the course materials.  In response to inquiries I 've decided that this month's post will be a modified version of the text of the presentation that I delivered–a primer or introduction to the important activities associated with importing.  I welcome any comments you might have and I also want to wish all visitors the very best for 2012!

5
Dec

Evolution of the Organizational Structure

When an organization has just been launched and only a small number of persons are involved there is generally ample opportunity for face-to-face communication among the members of the group and the need for a formal organizational structure is generally low provided that sufficient attention is paid to strategic planning and setting mutually agreed goals and objectives.  As organizations grow from very small (i.e., less than 20 employees) to relatively large (i.e., 80 or more employees), one notes significant changes in the management of workflow and structure becomes an important managerial challenge. At some point the range of activities and tasks that need to be performed within the organization expands to the point where the founders no longer have the time and skill to personally oversee all of them and a key challenge for the firm is the manner in which the founder delegate responsibilities and decision making authority to lower-level managers and new executives who join the founders as organizational leaders.  This report discusses some of the steps that should be taken for an orderly transition.

5
Dec

California Recognizes Two New Special Purpose Corporations

The corporation is the most widely used form of business organization in the United States. Several different types of corporations are recognized in most jurisdictions: general business or profit corporations; statutory close corporations, which offer the opportunity for shareholders of a small closely held enterprise to combine the flexibility of the partnership form with the advantages of the corporate form; non-profit corporations; cooperative corporations; and professional corporations. Also, many jurisdictions provide for the creation of special purpose corporations.  California is an example of the level of creativity in this area.  For many years that state has recognized consumer cooperative corporations, small business corporations and business and industrial corporations.   Recently, however, the choices have been expanded to include two additional corporate entities: flexible purpose corporations and benefit corporations.  The formation and operations of California flexible purpose corporations is governed by the California Corporate Flexibility Act of 2011 (“CFA”) [Ca. Corp. Code §§ 2500 et seq.], which provides that a flexible purpose corporation may be formed for special purposes, in addition to any other lawful purpose, including, but are not limited to, charitable and public purpose activities that could be carried out by a nonprofit public benefit corporation. [Ca. Corp. Code § 2602(b)(2)]  The CFA requires management and directors to specify objectives for measuring the impact of the flexible purpose corporation's efforts relating to its special purpose, and to include an analysis of those efforts in annual reports, together with specified financial statements, to shareholders and requires that specified information be made publicly available. [Corp. Code §§ 3500]  California benefit corporations are governed by Ca. Corp. Code §§ 14600 et seq. and may be formed for the purpose of creating general public benefit, defined as a material positive impact on society and the environment, taken as a whole, as assessed against a third-party standard that satisfies certain requirements. [Ca. Corp. Code § 14601(c)]  A benefit corporation may also identify one or more specific public benefits as an additional purpose of the corporation including, without limitation, providing low-income or underserved individuals or communities with beneficial products or services, promoting economic opportunity for individuals or communities beyond the creation of jobs in the ordinary course of business, preserving the environment and improving human health. [Ca. Corp. Code § 14601(e)(1)-(7)] Directors of benefit corporations are required to consider the impacts of any action or proposed action upon specified considerations including, among others, the shareholders and employees of the corporation, customers of the corporation who are beneficiaries of the general or specific public benefit purposes and the environment. [Ca. Corp. Code § 14620(b)(1)-(7)]  In addition, directors of benefit corporations are allowed to consider the impacts of those actions on, among other things, the resources, intent, and conduct of any person seeking to acquire control of the benefit corporation. [Ca. Corp. Code § 14620(c)]  Benefit corporations must prepare an annual benefit report which includes, among other things, a statement indicating whether, in the board's opinion, the benefit corporation failed to pursue its general public benefit and any specific public benefit, a description of the ways in which the benefit corporation pursued those benefits, the extent to which those benefits were created and the process and rationale for selecting the third-party standard used to prepare the benefit reports. [Ca. Corp. Code § 14630]  A handful of other states have adopted similar legislation covering benefit corporations, sometimes referred to as “B corporations”, and there viability will depend in large part on the development of case law regarding the permissible purposes of such corporations and the flexibility afforded to directors in discharging their fiduciary duties.