BU491 Chapter 5: Chapter 5 Creating Worldwide Innovation and Learning - Exploiting Cross-Border Knowledge Management
BU491 Chapter 5 – Creating Worldwide Innovation and Learning:
Exploiting Cross-Border Knowledge Management
To be successful in today’s world, you need to be able to recognize a consumer demand in one
country, get it designed in another, and manufacture it in yet another country
Once companies have global efficiencies, national responsiveness, and worldwide learning, the
key now is to link resources and start innovating
oTo be a quick innovator is vital, so your competitors don’t overtake you
oThat is why viewing your subsidiaries as a source of information is key!
Traditional Innovation: Central and Local Models
Center-for-global innovation model
oThe home country comes up with the innovation and disperses it across the world
Local-for-local innovation model
oThe subsidiary uses their local knowledge to come up with innovation
oThey act on perceived local demand, and use their resources/capabilities to innovate
Making Central Innovations Effective
The 3 most important capabilities of MNEs following this strategy:
oGaining the input from subsidiaries
You may not understand local market needs if you don’t ask your subsidiaries
Also the subsidiaries may not be committed to your ideas if they don’t have a
say!
oEnsuring that all functional tasks are linked to market needs
You have to connect new technology to consumer demand, otherwise it’s
useless
oIntegrating value chain functions by managing the transfer of responsibilities across
development, production, and marketing
Managing Responsibility Transfer: Personnel Flow
It’s harder to integrate cross-functionally when you use a central
innovation model
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