The Management of Multinational R&D: A Neglected Topic in International Business Research
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Douglas S. Bolon** Virginia Polytechnic Institute and State University
Abstract. Despite the growing involvement of multinational firms in foreign-based R&D during the past fifteen years, little research has been done on why and how firms internationalize their R&D and what effects it might have on firm competitiveness. The present paper calls attention to this neglect and seeks to advance the management of multinational R&D as an area of study for international business scholars. To this end, the paper first examines the key contributing factors to increased foreign R&D investmentsamong multinationals.It then reviews the research literature to find out what we presently know about the management of multinational R&D. Finally, a research agendais proposedto providea foundationand stimulusfor future investigations. Seven research directions are recommended, with an emphasis on interdisciplinary inquiry and a focus on issuesthat have both theoreticaland practicalsignificance. One of the most significant recent developments in the operations of multinational firms is their growing involvement in foreign-based research and development (R&D). According to the latest published data from the National Science Foundation [1990a], total U.S. foreign R&D expenditures had
*JosephL. C. Cheng(Ph.D.,Universityof Michigan)is an AssociateProfessorof InternationalBusinessandManagementat The Ohio StateUniversity.His current researchfocuses on strategy and organizationdesign for global firms and the managementof multinationalR&D. He has previouslypublishedin Advancesin InternationalComparative International Maniagement, Management Review,Academy of ManagementJournal,AdministrativeScience Quarterly,andHumanRelations, amongothers. **Douglas S. Bolon is an instructorand doctoralcandidatein the Management Departmentat VirginiaPolytechnicInstituteand State University.His research interestsincludeorganizationalcitizenshipbehaviors,organizationalcommitment, corporatecultures,and internationalhumanresourcemanagement. The authors would like to thank the editor and three anonymous reviewers for their helpful comments on earlier versions. Received: August 1991; Revised: February & May 1992; Accepted: June 1992. 1
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JOURNAL OF INTERNATIONALBUSINESS STUDIES, FIRST QUARTER 1993
increased from 2.2 billion dollars in 1978 to more than 6 billion dollars in 1988. On an annual basis, this growth reflected an average increase of 12%. (The average annual increase in inflation during the same period was about 6.3%.) While the proportion of foreign R&D expenditures to total R&D expenditures declined during the recessionary years of the early 1980s, it had increased steadily from 1985 through 1988, representing an average annual increase of 17%. By 1988, some industry groups were allocating large percentages of their R&D budgets to foreign-based R&D. For example, industrial chemical companies dev
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