Page 6

Management Challenges of Geographically Dispersed R&D The dispersion of R&D to multiple countries and external organizations and

partners carries significant risk. A survey of senior executives from a wide range of industries conducted by the Economist Intelligence Unit revealed that the big-

EXTERNAL PARTNERS WITH WHICH COMPANIES COLLABORATE IN R&D PROCESSES

gest concerns for respondents as they considered embracing the global innovation network model were intellectual property theft and a “loss of control over the in-

novation process.” Sixty percent cite the former as being a concern, and 44% cite the

latter.21 In addition, as open innovation is becoming a key characteristic of the global innovation network, many executives struggle to effectively manage their open innovation initiatives.

UNIVERSITIES AND EDUCATIONAL ESTABLISHMENTS

IP PROTECTION

CUSTOMERS

As they develop new technological competencies, multinationals investing in global

R&D facilities face the possibility of losing control over intellectual property rights.

In most emerging economies, IP rights are often either underdeveloped or underen-

SUPPLIERS

forced.22 Without sufficient legal protection, patents are vulnerable to piracy.

ALLIANCE PARTNERS

However, there are measures companies can take to protect their IP. For example, Thomson, a French provider of services, technologies and equipment to the media

JOINT VENTURE PARTNERS

and entertainment industries, has a global patent team and three divisional teams for 3RD PARTY VENDORS VIA OUTSOURCING ARRANGEMENT

R&D site in the network on a regular basis. Developing a culture of IP awareness is

COMPETITORS

key. Thomson has policies and processes to protect innovation wherever it may arise. “It’s part of the DNA of the company,” said Jean-Charles Hourcade, chief technol-

OTHER

0

10

Europe, America and Asia. In-house patent attorneys from these teams visit every

ogy officer at Thomson.23

20

30

40

50

60

% OF RESPONDENTS SURVEYED Respondents select all that apply. Source: Economist Intelligence Unit survey, 2007.

Hourcade’s top priority in coordinating R&D is to ensure that Thomson does not “outsource mission-critical activities that have a strong IP-generation potential.”

This means that no fundamental research is outsourced except as part of Thomson’s agreements with universities.24

When locating R&D in a region with weak IP protection, multinational companies tend to invest in wholly owned R&D centers and reduce their cooperation with

other organizations.25 Olivier Baujard, CTO of Alcatel-Lucent, the global provider 21

Tyrrell, P. 2007.

22

Jefferson, G., Rawski, T. 1994. “Enterprise Reform in

Chinese Industry.” Journal of Economic Perspectives. 8 (2): 47–70. 23

Tyrrell, P. 2007.

24

Ibid.

25

Li, J., Xie, Z. “Global R&D Strategies in an Emerging

Economy.” European Management Review. 8 (3): 153–164. 26

6

Tyrrell, P. 2007.

BATTEN BRIEFING INNOVATORS’ ROUNDTABLE SERIES

of voice, data and video communication solutions, said, “In countries where we

expect to have a long-lasting business interest, and where there are real R&D capabilities, cost savings and flexibility, we would rather set up our own operations than sub-contract. This has a double benefit: to develop locally the efficient control and

protection of our intellectual property, and to prove to the local country that we are serious about developing their R&D skills.”26

Profile for BattenInstitute

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