External-internal linkages and overseas autonomy-control tension: the management dilemma of the Japanese R&D in Europe

By examining how external/internal linkages held by overseas R&D labs affect autonomy-control tension within multinational corporations (MNCs), managerial dilemmas pertinent to international R&D management are discussed, especially in the context of internationalization of Japanese R&D in Europe. R&D is liable to be affected by high autonomy-control tension due to countervailing institutional forces at the functional level (research/corporate) and the geographical level (host country/home country). The external linkages an overseas R&D lab develops tend to increase the expected degree of local autonomy vis-a-vis the parent. The external linkages tend to increase the need for internal control on the part of the parent, especially when such sensitive issues as intellectual property rights and research initiatives are involved. Managers use internal linkages as a condition based on which local autonomy can be granted. Similarly, a high degree of internal linkages tends to decrease the difficulty of internal control and would even allow for some potential increase in local autonomy. An alternative multinational linkage strategy becomes necessary for the Japanese MNCs in the era of global R&D management in which the conventional social/cultural control mechanism may break down. This paper attempts to provide a basic framework which enables the association of such differences in linkage patterns with autonomy-control tension in a systematic way so that some new insight would be obtained regarding this classic yet unresolved tension.