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Organizing for Innovation (Size of the Firm (Advantages of Size (Better…
Organizing for Innovation
Size of the Firm
Advantages of Size
Better able to obtain financing
Better able to spread the costs of R&D over large volume
Greater economies of scale & learning effects
Taking on large scale or risky projects
Large firms typically make greater use of formalization & standardization, because of challenges of oversight
Disadvantages of Size
R&D efficiency might decrease due to loss of managerial control
More bureaucratic inertia
More strategic commitments tie firm to current technologies
Ambidexterity
Feeling small (
break firm into several subunits
, can utilize culture & control in different units)
Structural Dimensions
Formalization
Standardization
Centralization (centralized authority vs. activities)
Mechanistic
vs.
Organic
Modularity vs. Loosely Coupled
Modularity
- user or manufacturing level (or others)
Loosely coupled production
Coordination through adherence to shared objectives & standards
Less need for integration enables more flexible configurations
Results in a network of loosely connected firms or divisions of firms
Not if
: (1) Close coordination is needed & (2) High potential for conflict
Managing Innovation Across Borders
Problems
Innovation tailored to local markets might not be leveraged into other markets
Customization might make them poor fits for other markets
Divisions might be reluctant to share their innovations
"Not invented here"-syndrome
Strategies of multinational innovation
Center-for-global
Local-for-local
Locally leveraged
Globally linked
Transnational Approach
Reciprocal interdependence among divisions
Strong integrating mechanisms such as personnel rotation, division-spanning teams, etc.
Balance in organizational identity between national brands & global image