On the Innovative MNC : Leveraging Innovations and the Role of IT systems

Abstract: This thesis deals with the phenomena of development and transfer of innovations within multinational corporations (MNCs), and in particular, with the role of information technology (IT) systems in innovation.The empirical base of the thesis is both qualitative and quantitative. The case studies explore the phenomena of innovation development and transfer, delving more deeply into the use and role of IT systems in the innovation process in MNCs. The quantitative dataset spans a range of industries and captures key aspects, characteristics, and dynamics of the processes of innovation development and transfer at the unit level. Several empirical findings are presented in the five constituent papers. First, concerning innovation development, evidence is provided as to how both internal and external subsidiary’s network relationships are critical for innovation. Moreover, it is demonstrated how external versus internal relationships affect specific dimensions of innovativeness. In other words, internal relationships nurture the importance of the innovation, while external relationships enhance its radicality.Second, the study of a series of innovation transfer projects indicates that innovation characteristics (i.e. innovation complexity, tacitness, specificity) and integrative mechanisms (i.e. HQ involvement, lateral transfer routines, project groups, IT systems) should be considered together when pursuing innovation transfer. Additionally, using various integrative mechanisms incurs trade-offs between the transfer cost, speed, and level of implementation. In particular, it is found that the use of non-hierarchical structures and rich communication media is preferable, and that direct HQ involvement in transfer projects is detrimental for transfer performance.Third, specific research efforts devoted to investigating the role of IT systems in both innovation development and transfer phases, cast light on the potential role of IT systems for innovation in MNCs. Evidence demonstrates, first of all, how a specific IT system’s role in innovation development may vary depending on the innovation object, innovation phase, and context. Thus the interdependencies between innovation phase and coordination of IT tools are found to be key issues in managing the overall process. As for innovation transfer, the role of IT systems and their contribution to the process shifts from those of an efficient “transfer” mechanism to those of a “trigger” for knowledge development—an effect of the kind of relation existing between the units involved and the motives driving the system use.Finally, based on theoretical analysis of the innovation development and transfer process from a business network perspective, specific insights are presented as to the nature and limits of the innovative MNC. The study, which focuses particularly on the impact that innovation development has on the possibilities for inter-unit innovation transfer, leads to the conclusion that knowledge transfer and problem solving are not always either possible or desirable. Furthermore, the relevance of the “local place” for innovation and the “local-to-local” nature of innovation transfer are still so important in today’s global economy as to bring the modern view of the MNC as a transnational organization/differentiated network into question, and to point towards a representation of the MNC as a federation of relatively loosely-coupled entities.