Headquarters' control capacity and the choice of R&D organizational forms abroad

Dhikra Chebbi Nekhili (), Mehdi Nekhili and Walid Cheffi
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Dhikra Chebbi Nekhili: LEG - Laboratoire d'Economie et de Gestion - UB - Université de Bourgogne - CNRS - Centre National de la Recherche Scientifique
Walid Cheffi: Pôle Finance Responsable - Rouen Business School - Rouen Business School, College of business administration - University of Dubaï

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Abstract: This paper explains how the efficiency of control mechanisms affects the choice of organizational forms by MNCs that decentralize their R&D activities abroad. We identify five main organizational forms: wholly owned green-field subsidiary, wholly owned acquired subsidiary, joint venture, cross-licensing agreements, and unilateral licensing agreements. A questionnaire addressed to the managers of American and European MNCs shows that firms' choice of organizational form is related to the efficiency of control mechanisms over the R&D activities. We find that the internalization choice is underprivileged because of behavioral control difficulties. The difficulties of coordinating R&D activities reduce the parent firms' capacity to assess the strategic performance of R&D activities in a joint venture. The findings also show that the limited feasibility of assessing the financial performance of R&D activities does not affect negatively the choice of joint venture. So far, the option of either unilateral or cross-licensing agreements is employed even though there are divergences in rules, laws, and procedures between partners. Our findings provide empirical evidence on the strategic choice of R&D organizational forms abroad.

Keywords: R&D; Multinational Companies; Control Mechanisms; Organizational Forms (search for similar items in EconPapers)
Date: 2013-09-01
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Published in Bankers Markets & Investors : an academic & professional review, 2013, n° 126, pp 4-16

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Related works:
Working Paper: Headquarters' control capacity and the choice of R&D organizational forms abroad (2011)
Working Paper: Headquarters’ Control Capacity and the Choice of R&D Organizational Forms Abroad (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00862483

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