Scenarios RD in MNE

1
Scenarios on Technological Innovation and
Knowledge Production by Multinational Enterprises

Dana Mietzner and Prof. Dr. oec. Guido
Reger Centre for Entrepreneurship and Innovation
at the University of Potsdam, Germany
International Forum on Technology Innovation
and Technology Competitive Intelligence
Beijing Academy of Science and Technology
Peking University Beijing, October 16 - 18, 2008
www.professor-reger.de www.ceip.uni-potsdam.de
2
Core question Key Actor Multinational
Enterprises (MNE)
How will knowledge production by multinational
enterprises and their relative role for knowledge
production in the European Research Area change
until 2020?

• Identifying important trends and changes of
  knowledge generation by MNE
• Assessing the relative importance of MNE in the
  knowledge generation
• Developing scenarios on the future of knowledge
  generation by MNE until 2020 and analyzing the
  impact of the scenario on the actors of the
  European Research Area

3
Scenario Analysis

• Scenario analysis as a method to discover or
  invent, examine or evaluate, propose and promote
  possible, probable and preferable futures.
• Dealing with the complexity and uncertainty of
  the environment should by itself create or at
  least strengthen the basic conditions to improve
  the learning as well as the decision making
  process as well as make executives aware of so
  far unknown opportunities and threats.
• Aim of our scenario analysis is to explore
  multiple futures not to predict one future
• Development of explorative scenarios starting
  from present trends and defining the possible
  future outcomes

4
Developing Scenarios
Key Factors
Future Projections
Scenarios
Future Spaces
What is the present situation? What are the
driving forces?
How may the key factors develop in the future?
Which possible future scenarios are imaginable?
How are the different scenarios inter-linked?
Conclusions?
5
Background and Sources for Information
Scenario analysis sources of information
Own quantitative empirical research studies
Own longitudinal empirical case study research
on selected MNE (beginning of 90s until today)
Broad literature review
6
Main Changes in the Management of Technology and
RD in MNE

• RD as a strategic element in competition- MNEs
  have developed more and more overall strategies
  for their management of technology- Need
  for strategies to enable firms to build knowledge
  in existing core technologies but also to
  assess newly emerging technologies to sustain
  long-term competitiveness
• Time-based strategies to decrease
  time-to-market- Shorter time-horizons for market
  introduction in many sectors- Time-to market
  significant factor of the innovation and company
  strategy
• Integrating the various elements of the value
  chain- The traditional institutional separation
  of basic research, applied research,
  development, production and application may be
  overcome- Integrated product development
  processes, simultaneous engineering, and
  closer links between RD, marketing,
  product/process development

7
Main Changes in the Management of Technology and
RD in MNE

• 4. Increasing relevance of innovation-related
  networking- There is a growing tendency of MNEs
  to acquire technology from external resources
  
• 5. Internationalisation of innovation-
  International exploitation of technology produced
  on a national basis- Collaboration with partners
  in more than one country for the development
  of know-how and innovation- Internal RD
  networks as innovation activities which are
  carried out simultaneously in the home and the
  host country
• Organising RD activities in MNE
  (decentral/central)- Changes in the overall
  organisation have a strong impact on the
  organisation of RD- In general, there seems to
  be a shift from the centralization of RD
  toward the decentralisation of RD since the 1980s

Main changes and challenges of RD management in
MNE aresummarized in different Generations of
RD Management (see e.g. Roussel, Saad, Tiby
(1991), Coombs, Richards (1993), Edler,
Meyer-Krahmer, Reger (2002), Rothwell (1993))
8
Influence Areas
Technology
Future Ways of Knowledge Production by
Multinational Enterprises
Competition/ Regulation
Knowledge
Market
MNE Inside
9
Influence Areas and Influence Factors
Knowledge
Technology

• Speed of knowledge production
• Novelty of knowledge production
• Costs of knowledge production
• Property of knowledge production (IPR)
• Globalisation of knowledge production
• Efficiency of knowledge production
• Complexity of knowledge production
• Investment in knowledge production

14. Technological competencies of public RD
system 15. Technological competencies of
high-tech SME 16. Technological competencies of
MNE
Competition/Regulation

• Industrial structure
• Competition
• Regulations and policy interventions at EU level

Market
MNE Inside

• Corporate Governance
• Organisation of RD activities
• Customer orientation
• Innovation in company strategy

• Attractiveness of foreign markets
• Change of the population
• Change of the age pyramid
• Economic development
• Change of values

10
Influence Factors - Reduction of Complexity

• Influence Factors
• Speed of knowledge production
• Novelty of knowledge production
• Costs of knowledge production
• Property of knowledge production (IPR)
• Globalisation of knowledge production
• Efficiency of knowledge production
• Complexity of knowledge production
• Investment in knowledge production
• Attractiveness of foreign markets
• Change of the population
• Change of the age pyramid
• Economic development
• Change of values
• Technological competencies of public RD system
• Technological competencies of high-tech SME
• Technological competencies of MNE
• Industrial structure

11
Selected Key Factors

• Competition (18)
• Economic development (12)
• Globalisation of knowledge production (5)
• Innovation in company strategy (23)
• Investment in knowledge production (8)
• Novelty of knowledge production (2)
• Technological competencies of MNE (16)
• Change of the age pyramid (11)
• Change of values (13)
• Regulations and policy interventions at EU level
  (19)

Numeration is equivalent to the numeration in
the system grid
12
Selected Projections of the Ten Key Factors
(selection of samples)
13
Selected Projections of the Ten Key Factors
(selection of samples)
14
2D Future Space Mapping of our Four Scenarios
Scenario 4Zero Growth
Scenario 1 The long boom
Scenario 3Handpicked innovation
Scenario 2Ups and downs
15
Scenario 1 2020 - The Long Boom
16
Scenario 4 2020 Zero Growth
17
Conclusions

• Scenario approach suitable approach to learn
  more about the future of knowledge generation in
  MNEs
• Comprehensive overview about the object of
  investigation with help of a structured and
  transparent process
• No theory about driving forces of knowledge
  generation in MNEs, thats why we had to choose
  the heuristic approach
• Work in progress
• - Scenario analysis is based on interviews and
  literature further expert interviews to
  improve quality and value of the scenarios are
  needed and will be conducted in the near future
• - Implications for RD management have to be
  specified

18
Contact
Prof. Dr. Guido Reger Chair for Innovation and
Entrepreneurship Phone [phone] Email
Guido.Reger_at_uni-potsdam.de
Dana Mietzner Leader Research Group New Market
Intelligence and Technology Foresight Phone
49-331-977-4500 Email Dana.Mietzner_at_uni-potsdam.
de
Centre for Entrepreneurship and Innovation at the
University of Potsdam (BIEM-CEIP) Am Park
Babelsberg 14, D-14482 Potsdam, GERMANY
www.professor-reger.de www.ceip.uni-potsdam.de
19
References
Becker-Boost, E., Fiala, E. (2001) Globaler
Wohlstand durch nachhaltiges Wirtschaften.
Springer, Berlin. Coombs, R., Richards, A.
(1993) Strategic Control of Technology in
Diversified Companies with Decentralized RD. In
Technology Analysis Strategic Management, 5,
4. Edler, J., Meyer-Krahmer, F., Reger, G.
(2002) Changes in the Strategic Management of
Technology - Results of a Global Benchmarking
Study. In RD Management, Vol. 32, No.2, March
2002, 149-164. Gerybadze, A., Reger, G. (1999)
Globalization of RD Recent Changes in the
Management of Innovation in Transnational
Corporations. In Research Policy, 28,2-3, March
1999, 251-274. Hauschildt, J. (1997)
Innovationsmanagement, 2nd edition. Gabler,
München. Ilsemann von, W. (1980) Die geteilte
Zukunft. Szenarioplanung bei Shell, in
ManagerMagazin 5/80, 115-123. Rothwell, R.
(1991) Successful Industrial Innovation
Critical Factors for the 1990s. Extended version
of a paper presented to the Science Policy
Research Unit's 25th Anniversary
Conference.Brighton University of Sussex, 3-4
July 1991. Rothwell, R. (1993) The Fifth
Generation Innovation Process. In Oppenländer,
K.-H., pp, W. Privates und staatliches
Innovationsmanagement. München. Roussel, P.A.
Saad, K.N. Erickson, T.J. (1991) Third
Generation RD. Managing the Linkto Corporate
Strategy. Boston Harvard Business School
Press. United Kingdom, DTI (2004). The 2004 RD
Scoreboard The Top 700 UK and 700 International
Companies by RD Investment (London
DTI).(www.innovation.gov.uk/projects/
rd_scoreboard/home.asp).
20
Backup
21
Consistency Analysis MNE and Knowledge Production
(Cutout)
22
First Generation of RD Management in MNE
First Generation RD Management The Intuitive
Mode
Source Roussel, P.A. Saad, K.N. Erickson, T.J.
(1991) Third Generation RD. Managing the Link
to Corporate Strategy. Boston Harvard Business
School Press.
23
Second Generation of RD Management in MNE
Second Generation RD Management The Systematic
Mode
Source Roussel, P.A. Saad, K.N. Erickson, T.J.
(1991) Third Generation RD. Managing the Link
to Corporate Strategy. Boston Harvard Business
School Press.
24
Third Generation of RD Management in MNE
Third Generation RD Management Strategic and
Purposeful
Source Roussel, P.A. Saad, K.N. Erickson, T.J.
(1991) Third Generation RD. Managing the Link
to Corporate Strategy. Boston Harvard Business
School Press.
25
Fourth Generation of RD Management in MNE
Fourth Generation RD Management
Source Edler, J. Meyer-Krahmer, F. Reger, G.
Changes in the Strategic Management of Technology
Results of a Global Benchmarking Study. In RD
Management, Vol. 32, No. 2, March 2002, 149-164.
26
Influence Matrix Influence Analysis
27
Screen Diagramm Selection of Four Scenarios
28
3D Future Space Mapping of our Four Scenarios
29
Scenario 2 2020 Ups and Downs -gt Impact and
Recommendations
30
Scenario 3 2020 Handpicked Innovation -gt
Impact and Recommendations
31
Influence Factors General Interpretation of
System Grid
32
Scenario Analysis - Model-based Approach
Future ways of knowledge production by
Multinational Enterprises
1
Defining the subject of the scenario process
2
Detection of key factors
3
Foresight of alternative projections
4
Calculation and formulation of scenarios
5
Analysis, mapping and interpretation of scenarios
Our scenario approach is based on the eight steps
originally introduced by Ute von Reibnitz (1988,
1992).
33
RD Expenditures by Selected MNE and Economies,
2002, billion
Source UNCTAD 2005 and United Kingdom, DTI 2004
34
Economic Significance of RD in MNE

• In 2002, the 700 largest RD spending firms of
  the world (310 billion) accounted for
• close to half (46) of the worlds total RD
  expenditure (677 billion)
• and more than two-thirds (69) of the worlds
  business RD (450 billion) (see United Kingdom,
  DTI 2004)
• In six MNE (Ford, Pfizer, DaimlerChrysler,
  Siemens, Toyota, GM), RD spending exceed 5
  billion and is higher than that of many countries
  
• Over 80 of the 700 largest RD spending firms
  come from only five countries the United States,
  Japan, Germany, the United Kingdom and France, in
  that order (see United Kingdom, DTI 2004)
• Only 1 of the top 700 are based in developing
  countries, although several have moved up the
  ranks since the late 1990s (see UNCTAD 2005)
• Qualitative importance of RD in MNE in the
  overall innovation process
• developing new technologies, complex and systemic
  innovation
• high availability of resources
• production and commercialisation of new products
• very good market access and distribution networks