Deck 5: Creating Worldwide Innovation and Learning: Exploiting Cross Border Knowledge Management

Question 1

The two main prerequisites for local innovation are the dispersal of organizational assets and resources and a concentration of authority.

Answer 1

False
(The first half is correct, the second is not: "Perhaps the most important factor supporting local innovation is the dispersal of the organizational assets and resources and the delegation of authority that must accompany it.")

Question 2

Globally linked innovations involve processes designed to ensure that the special resources and capabilities of each subsidiary are globally available to other units of the organization.

Answer 2

True
(Globally linked innovation pools the resources and capabilities of many different units - typically at both the parent company and the subsidiary level - to create and manage an activity jointly. It allows the company to take market intelligence developed in one part of the organization, perhaps link it to specialized expertise located in a second entity and a scarce resource in a third, and then eventually diffuse the new product worldwide).

Question 3

Linking local managers to corporate decision-making processes makes them more effective in managing local innovation.

Answer 3

True
(Whereas local resources and autonomy make it feasible for subsidiary managers to be creative and entrepreneurial, linkages to corporate decision-making processes are necessary to make local-for-local tasks effective for the company as a whole).

Question 4

With responsibility for his company's largely centralized R&D activities, Frank worries that the center may not understand local market needs, while the subsidiaries may not be committed to innovations developed at the center. To respond to these concerns, Frank's priority should be to:

A) adopt a single point of contact between headquarters and the subsidiaries to focus the flow of information.
B) ensure that several key people in the foreign subsidiaries are linked to individuals at the headquarters who can represent and defend their views.
C) carefully select the people he interacts with in the subsidiaries in order to reduce conflicting perspectives regarding innovation management.
D) listen to the different national perspectives and priorities, but minimize differences in views from multiple subsidiaries' input.

Question 5

In transnational companies like Unilever, products, functions, and geographic regions are coordinated in a differentiated manner, accounting for the respective demands for integration and responsiveness.

Question 6

To make central innovation effective, the purpose of building multiple linkages between headquarters and subsidiaries is to exercise better control over those operations.

Question 7

A local-for-local approach to innovation is not compatible with cross-functional integration within national operations.

Question 8

Frank is director of technology in an MNE in which most of the R&D activities are performed in the parent company's home country, but then, foreign subsidiaries are responsible for introducing the resulting innovations to their local customers. The innovation process adopted by Frank's MNE is:

A) globally linked.
B) local-for-local.
C) center-for-global.
D) locally leveraged.

Question 9

The innovation process described as local-for-local implies the decentralization of R&D activities in multiple countries.

Question 10

Despite the differences that exist among transnational organizations, there is one optimal approach to managing innovation in these firms.

Question 11

Company X is operating in a fast-changing, knowledge-intensive industry. The most feasible structure for its innovative processes is therefore central-to-global because that allows for a high degree of corporate control.

Question 12

The greatest risk facing center-for-global innovation is market insensitivity.

Question 13

What is the primary advantage of operating interdependent subsidiaries?
A) It reduces the need to control subsidiaries and to coordinate their activities.

A) It allows the company to integrate scale-efficient operations and to cross-subsidize subsidiaries when necessary.
B) It provides an opportunity to balance the interests of subsidiaries with the needs of the headquarters.
C) It prevents subsidiaries from becoming too independent or uncontrolled.

Question 14

Which of the following does not enhance the efficiency of a local-for-local innovation process?

A) Dispersing assets and resources to the subsidiaries and delegating decision-making authority regarding innovations to them.
B) Assigning competent headquarter managers to lead development projects within a subsidiary.
C) Improving linkages between headquarters and subsidiaries through the use of expatriates.
D) Promoting cross-functional integration at the subsidiary level.

Question 15

The development of transnational innovation requires that the roles performed by organizational units worldwide are essentially uniform, and that the headquarters manages all of its subsidiaries in the same manner.

Question 16

Transnational innovation requires management processes to be dominated by simple systems of control.

Question 17

Which of the following management assumptions is most likely to support transnational innovation in MNEs?

A) The roles of different organizational units should be uniform and symmetrical.
B) The headquarter-subsidiary relationship should be based on clear and unambiguous patterns of dependence or independence.
C) Career paths should be structured to give managers cross-border and cross-functional experience.
D) Headquarters should be responsible for exercising decision-making and control uniformly.

Question 18

Emerging strategic demands make organizational models based on interdependence the most appropriate form for headquarter-subsidiary relationships.

Question 19

Local-for-Local innovative processes can be enhanced through integrating subsidiary functions across different levels. At which level are the control and conflict resolution tasks best concentrated?

A) At the project level (called "article team" at Philips), where relatively junior managers from the commercial and technical functions work together
B) At the product level, where a team of technical and commercial representatives engage in cross-functional coordination
C) At the senior management committee level, where the top commercial, technical, and financial managers in the subsidiary foster subsidiary-level coordination
D) All of the above

Question 20

The most effective way to coordinate knowledge flows in a transnational organization is through the process of formalization.

Question 21

Vito is a consultant advising a major corporation. His client has requested assistance with improving the effectiveness of its innovation process. Vito noticed that the client's subsidiaries enjoy a high degree of independence. Vito suspects that there may be significant risks associated with this degree of independence. What are these risks and what are some alternatives that can be employed to mitigate these risks?

Question 22

There is no one best way to manage innovation in MNEs. Please comment.

Question 23

Which of the following is not an appropriate coordination mechanism to be employed by a transnational corporation with worldwide activities?

A) The coordination of information flows through the socialization of employees.
B) The coordination of asset flows through a process of rationalization.
C) The coordination of product flows through formalized management processes.
D) The coordination of resource flows through centralized decision-making.

Question 24

Traditionally, MNEs developed innovation processes that were either very centralized (resulting in center-for-global innovation), or very decentralized (resulting in local-for-local innovation.) More recently, companies have developed two transnational innovation models. Describe the new models and the advantages they have over the older approaches to innovation.

Question 25

Worldwide Consulting Limited is an Italian-based service company with activities in 23 countries. The company operates by embedding a large number of expatriates in foreign subsidiaries, even though the expatriates are not always familiar with the host country to which they are assigned. What is the most important benefit Worldwide Consulting is most likely to achieve through this practice?

A) An exchange of information and knowledge across subsidiaries facilitated by the expatriates.
B) The presence of expatriate employees enhances the prestige of the foreign subsidiaries and increases client satisfaction.
C) The presence of a large number of expatriates improves employee motivation and reduces employee turnover.
D) Having ex-pat employees allows the parent company to keep tighter control of its offshore subsidiaries.

Question 26

TechInnovation is a large MNE operating in an environment characterized by rapid changes. During the past 50 years, its subsidiaries have operated independently. Which of the following actions will be least helpful to increase the interdependence across its widely dispersed national organizations?

A) TechInnovation could centralize more decision-making to counter-balance the decentralization that has taken place during the past 50 years.
B) TechInnovation could create regular cross subsidiary meetings to coordinate activities and resolve differences.
C) TechInnovation could break up its value-chain to ensure that subsidiaries perform interrelated activities.
D) TechInnovation could develop career paths to routinely transfer managers across subsidiaries.

Question 27

Mr. Smith is the recently appointed CEO of a diversified MNE operating in 22 countries on four continents and in multiple industries ranging from bulk chemicals to consumer packaged goods. He became concerned that in his very decentralized organization, all businesses were managed primarily by the national subsidiaries. With a poor record in innovation, Smith wondered what he could do to improve the innovation process. What two or three changes would you recommend he consider?

Question 28

In developing differentiated coordination processes in a transnational organization, which of the following factors would be most important for an MNC manager to consider?

A) How the company sources its raw materials, transfers technologies, and manages scarce resources.
B) How the company is structured and how decision-making authority is assigned.
C) The environment in which the firm operates and the nature of competition in that environment.
D) The portfolio of products that the MNE offers and the markets in which it offers them.

Question 29

What are the challenges associated with managing a center-for-global innovation process and what are some of the measures that can be employed to ensure that the process is efficient?

Question 30

Campbell Enterprises is an MNE in which local-for-local innovation is a priority. A new CEO wants to understand the conditions needed to make such innovations more effective, as well as your reasons for making such recommendations.