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

Author

Listed:
  • Dhikra Chebbi Nekhili

    (LEG - Laboratoire d'Economie et de Gestion - UB - Université de Bourgogne - CNRS - Centre National de la Recherche Scientifique)

  • Mehdi Nekhili

    (Pôle Finance Responsable - Rouen Business School - Rouen Business School)

  • Walid Cheffi

    (Pôle Finance Responsable - Rouen Business School - Rouen Business School, College of business administration - University of Dubaï)

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.

Suggested Citation

  • Dhikra Chebbi Nekhili & Mehdi Nekhili & Walid Cheffi, 2013. "Headquarters' control capacity and the choice of R&D organizational forms abroad," Post-Print hal-00862483, HAL.
  • Handle: RePEc:hal:journl:hal-00862483
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    R&D; Multinational Companies; Control Mechanisms; Organizational Forms;
    All these keywords.

    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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