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Headquarters’ Control Capacity and the Choice of R&D Organizational Forms Abroad

Author

Listed:
  • Mehdi Nekhili

    () (Université de Reims Champagne Ardennes)

  • Dhikra Chebbi Nekhili

    (Université de Bourgogne)

  • Walid Cheffi

    () (Groupe ESC Rouen)

Abstract

The paper aims to explain the choice of organizational forms by multinational companies (MNCs) when decentralizing abroad their R&D activities. We identify five main organizational forms: wholly owned green-field subsidiary, wholly owned acquired subsidiary, joint venture, cross-licensing agreements and unilateral licensing agreements. On the basis of questionnaires addressed to the R&D managers of American and European MNCs, we highlight that the choice of an organizational form is related to the firm’s capacity of control, performance measurement and incentive systems, to resolve the agency conflicts in each form. Our findings show that the internalization choice is underprivileged because of behavioral control difficulties. The possibility of ensuring a strategic performance evaluation of R&D activities favors the cross-licensing agreement over the joint venture choice. Finally, the choice of unilateral licensing agreements is not supported because of feasibility issues concerning the financial evaluation of the performance of R&D activities.

Suggested Citation

  • Mehdi Nekhili & Dhikra Chebbi Nekhili & Walid Cheffi, 2009. "Headquarters’ Control Capacity and the Choice of R&D Organizational Forms Abroad," Working Papers CREGO 1090503, Université de Bourgogne - CREGO EA7317 Centre de recherches en gestion des organisations.
  • Handle: RePEc:dij:wpfarg:1090503
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    References listed on IDEAS

    as
    1. M Krishna Erramilli, 1996. "Nationality and Subsidiary Ownership Patterns in Multinational Corporations," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 27(2), pages 225-248, June.
    2. William G. Ouchi, 1979. "A Conceptual Framework for the Design of Organizational Control Mechanisms," Management Science, INFORMS, vol. 25(9), pages 833-848, September.
    3. Jon I Martinez & J Carlos Jarillo, 1989. "The Evolution of Research on Coordination Mechanisms in Multinational Corporations," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 20(3), pages 489-514, September.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    R&D; foreign investments; multinational companies; control mechanisms; organizational Forms.;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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