Question 1

Frank is director of technology in an MNE in which most of the R&D activities are performed in the parent company's home country, but then, foreign subsidiaries are responsible for introducing the resulting innovations to their local customers. The innovation process adopted by Frank's MNE is:

Accepted Answer

A)   globally linked.
B)   local-for-local.
C)   center-for-global.
D)   locally leveraged. C

Question 2

What is the primary advantage of operating interdependent subsidiaries?

Accepted Answer

A)   It reduces the need to control subsidiaries and to coordinate their activities.
B)   It allows the company to integrate scale-efficient operations and to cross-subsidize subsidiaries when necessary.
C)   It provides an opportunity to balance the interests of subsidiaries with the needs of the headquarters.
D)   It prevents subsidiaries from becoming too independent or uncontrolled. B

Question 3

Local-for-Local innovative processes can be enhanced through integrating subsidiary functions across different levels. At which level are the control and conflict resolution tasks best concentrated?

Accepted Answer

A)   At the project level (called "article team" at Philips) , where relatively junior managers from the commercial and technical functions work together
B)   At the product level, where a team of technical and commercial representatives engage in cross-functional coordination
C)   At the senior management committee level, where the top commercial, technical, and financial managers in the subsidiary foster subsidiary-level coordination
D)   All of the above B

Question 4

Traditionally, MNEs developed innovation processes that were either very centralized (resulting in center-for-global innovation), or very decentralized (resulting in local-for-local innovation.) More recently, companies have developed two transnational innovation models. Describe the new models and the advantages they have over the older approaches to innovation.

Accepted Answer

The answer of Traditionally, MNEs developed innovation processes that were...

Question 5

Emerging strategic demands make organizational models based on interdependence the most appropriate form for headquarter-subsidiary relationships.

Accepted Answer

A) True 
 B)False

Question 6

There is no one best way to manage innovation in MNEs. Please comment.

Accepted Answer

The answer of There is no one best way to...

Question 7

Which of the following management assumptions is most likely to support transnational innovation in MNEs?

Accepted Answer

A)   The roles of different organizational units should be uniform and symmetrical.
B)   The headquarter-subsidiary relationship should be based on clear and unambiguous patterns of dependence or independence.
C)   Career paths should be structured to give managers cross-border and cross-functional experience.
D)   Headquarters should be responsible for exercising decision-making and control uniformly.

Question 8

Globally linked innovations involve processes designed to ensure that the special resources and capabilities of each subsidiary are globally available to other units of the organization.

Accepted Answer

A) True 
 B)False

Question 9

The innovation process described as local-for-local implies the decentralization of R&D activities in multiple countries.

Accepted Answer

A) True 
 B)False

Question 10

Vito is a consultant advising a major corporation. His client has requested assistance with improving the effectiveness of its innovation process. Vito noticed that the client's subsidiaries enjoy a high degree of independence. Vito suspects that there may be significant risks associated with this degree of independence. What are these risks and what are some alternatives that can be employed to mitigate these risks?

Accepted Answer

The answer of Vito is a consultant advising a major...

Question 11

To make central innovation effective, the purpose of building multiple linkages between headquarters and subsidiaries is to exercise better control over those operations.

Accepted Answer

A) True 
 B)False

Question 12

TechInnovation is a large MNE operating in an environment characterized by rapid changes. During the past 50 years, its subsidiaries have operated independently. Which of the following actions will be least helpful to increase the interdependence across its widely dispersed national organizations?

Accepted Answer

A)   TechInnovation could centralize more decision-making to counter-balance the decentralization that has taken place during the past 50 years.
B)   TechInnovation could create regular cross subsidiary meetings to coordinate activities and resolve differences.
C)   TechInnovation could break up its value-chain to ensure that subsidiaries perform interrelated activities.
D)   TechInnovation could develop career paths to routinely transfer managers across subsidiaries.

Question 13

Linking local managers to corporate decision-making processes makes them more effective in managing local innovation.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following does not enhance the efficiency of a local-for-local innovation process?

Accepted Answer

A)   Dispersing assets and resources to the subsidiaries and delegating decision-making authority regarding innovations to them.
B)   Assigning competent headquarter managers to lead development projects within a subsidiary.
C)   Improving linkages between headquarters and subsidiaries through the use of expatriates.
D)   Promoting cross-functional integration at the subsidiary level.

Question 15

Which of the following is not an appropriate coordination mechanism to be employed by a transnational corporation with worldwide activities?

Accepted Answer

A)   The coordination of information flows through the socialization of employees.
B)   The coordination of asset flows through a process of rationalization.
C)   The coordination of product flows through formalized management processes.
D)   The coordination of resource flows through centralized decision-making.

Question 16

Company X is operating in a fast-changing, knowledge-intensive industry. The most feasible structure for its innovative processes is therefore central-to-global because that allows for a high degree of corporate control.

Accepted Answer

A) True 
 B)False

Question 17

The two main prerequisites for local innovation are the dispersal of organizational assets and resources and a concentration of authority.

Accepted Answer

A) True 
 B)False

Question 18

A local-for-local approach to innovation is not compatible with cross-functional integration within national operations.

Accepted Answer

A) True 
 B)False

Question 19

With responsibility for his company's largely centralized R&D activities, Frank worries that the center may not understand local market needs, while the subsidiaries may not be committed to innovations developed at the center. To respond to these concerns, Frank's priority should be to:

Accepted Answer

A)   adopt a single point of contact between headquarters and the subsidiaries to focus the flow of information.
B)   ensure that several key people in the foreign subsidiaries are linked to individuals at the headquarters who can represent and defend their views.
C)   carefully select the people he interacts with in the subsidiaries in order to reduce conflicting perspectives regarding innovation management.
D)   listen to the different national perspectives and priorities, but minimize differences in views from multiple subsidiaries' input.

Question 20

In transnational companies like Unilever, products, functions, and geographic regions are coordinated in a differentiated manner, accounting for the respective demands for integration and responsiveness.

Accepted Answer

A) True 
 B)False

Exam 5: Creating Worldwide Innovation and Learning: Exploiting Cross Border Knowledge Management

Frank is director of technology in an MNE in which most of the R&D activities are performed in the parent company's home country, but then, foreign subsidiaries are responsible for introducing the resulting innovations to their local customers. The innovation process adopted by Frank's MNE is:

What is the primary advantage of operating interdependent subsidiaries?

Local-for-Local innovative processes can be enhanced through integrating subsidiary functions across different levels. At which level are the control and conflict resolution tasks best concentrated?

Emerging strategic demands make organizational models based on interdependence the most appropriate form for headquarter-subsidiary relationships.

There is no one best way to manage innovation in MNEs. Please comment.

Which of the following management assumptions is most likely to support transnational innovation in MNEs?

Globally linked innovations involve processes designed to ensure that the special resources and capabilities of each subsidiary are globally available to other units of the organization.

The innovation process described as local-for-local implies the decentralization of R&D activities in multiple countries.

To make central innovation effective, the purpose of building multiple linkages between headquarters and subsidiaries is to exercise better control over those operations.

TechInnovation is a large MNE operating in an environment characterized by rapid changes. During the past 50 years, its subsidiaries have operated independently. Which of the following actions will be least helpful to increase the interdependence across its widely dispersed national organizations?

Linking local managers to corporate decision-making processes makes them more effective in managing local innovation.

Which of the following does not enhance the efficiency of a local-for-local innovation process?

Which of the following is not an appropriate coordination mechanism to be employed by a transnational corporation with worldwide activities?

Company X is operating in a fast-changing, knowledge-intensive industry. The most feasible structure for its innovative processes is therefore central-to-global because that allows for a high degree of corporate control.

The two main prerequisites for local innovation are the dispersal of organizational assets and resources and a concentration of authority.

A local-for-local approach to innovation is not compatible with cross-functional integration within national operations.

With responsibility for his company's largely centralized R&D activities, Frank worries that the center may not understand local market needs, while the subsidiaries may not be committed to innovations developed at the center. To respond to these concerns, Frank's priority should be to:

In transnational companies like Unilever, products, functions, and geographic regions are coordinated in a differentiated manner, accounting for the respective demands for integration and responsiveness.