Controlling Foreign R&D Subsidiaries: Empirical Evidence on Japanese Multinationals

Since the 1990s foreign research and development (R&D) has increased considerably in German as well as in Japanese companies. The Japanese ratio of overseas R&D expenditure has about quadrupled since the mid 1980s, whereas German firms have established as many foreign R&D sites during the last 10 years as cumulatively in the 50 years before that. The question of how to coordinate, control and finally integrate R&D conducted in foreign subsidiaries of multinational corporations (MNCs) is thus becoming more urgent to innovative firms.

Headquarters in different countries seem to have different preferences regarding the management of their subsidiaries: prior research has shown distinctive differences in degree and type of subsidiary control between national groups. On the other hand, common competitive pressures might impose specific structures: there is a vivid discussion in current innovation literature about common organizational requirements resulting from increasing globalization.

Has such adaptation occurred in Japanese companies? How different are control structures by industry? By host-country? To what extent does the management of foreign R&D facilities reflect traditional Japanese preferences of controlling overseas subsidiaries?

The presentation will address some of these questions based on empirical evidence from an ongoing study of roughly 50 foreign R&D units of Japanese multinational corporations and offer some tentative comparisons to structures in German multinationals.

Roman Bartnik is research associate at the Mercator School of Management and the Institute of East Asian Studies at Duisburg-Essen University and currently visiting research fellow at the Graduate School of Economics of Hitotsubashi University, courtesy of a scholarship from the Japan Society for the Promotion of Science (Nihon Gakujutsu Shinkōkai).