Exploratory Phase

Exploratory case studies are appropriate when the initial research questions are loosely specified, usually as a result of a focus on new and understudied phenomena (Yin, 2009). The primary goal of this phase was to gain a better understanding of what could be learned in the context of establishing innovation in foreign subsidiaries and then to generate appropriate research questions. During this phase, 23 interviews ranging from 30 to 60 minutes each were conducted with managers at both indigenous and multinational companies in India, China, UK and Canada from industries including consulting, telecommunications, consumer goods, software development and services, automobile design and manufacturing, energy, healthcare, and semiconductors. Audio recordings of each interview were made and transcribed when permitted. A summary of the interviews conducted, according to the industry of the MNE, the location of the

Figure 7: Progression of research phases.

Initiation Stage Define topic area

Exploratory Phase Establish research questions and context

Multiple Case Study Replication within and between MNEs

interviewees, the home country of the MNE, and the scope of the applicable markets and innovation activities, is presented in Table 3.

Table 3: Interviews conducted during the exploratory phase of the research.

Contacts ^†Company Industry Contact Nation

Diversified India US Global/Global 1 Retail Co.,

One question typically asked of each respondent was, “How was that innovation carried out?”, with respect to a particular example provided by the respondent. One response, by a senior engineering manager at ETF Co., India provided some particularly interesting insights. In response to the question, “How would you say this innovation came about? Was it something that was planned?”, he responded with somewhat of an admonishment of the notion that innovation could be a „process‟, or at least that people involved might not consider that to be an accurate or useful characterization:

“You can create innovation ecosystems, innovation practices, but where it becomes an issue is when you talk about innovation as a process. And when you talk about innovation as a process, then you have a goal, you have very defined steps to get to there. And many people might take issues with that [characterization of innovation]. But if you talk about innovation as a practice, and what are the ways to ensure that the right environment is there, that is [acceptable].”

The theme of environment was repeated by other members of ETF, India as well.

For example, one engineer mentioned that “Management has to provide an environment wherein if people are thinking differently, people are challenging the status quo”. The theme that ideas could be „killed‟ if managers did not provide the right environment came up repeatedly during this site visit as well. The notion of environment came up at other research sites as well, such as the manager from IS Services Co., cited in Chapter 3 regarding the notion of status, esteem and aspiration of the members of the innovation team at that company.

At SoftCo. China, one human resource manager mentioned the freedom that employees had to pursue whatever projects they were interested in:

Of course we would, as a company, want to see some technology transfer to our own product. But actually there is no pressure at all so we often joke that SoftCo. researchers are living a very good life. They can basically choose whatever they want to do and the company is very generous in term of giving them resources and freedom to do their own research.

I became interested in how such an environment was created, and how it could be effectively managed. Not all companies would necessarily have the resources to allow employees to pursue „whatever they wanted‟, as in the SoftCo example. Nonetheless, it seemed that there should be a tension in managing this notion of freedom along with the organizational need for efficiency, integration, and profiting from innovation. Upon reviewing the literature again, the communities of practice perspective on innovation became a dominant theme in guiding the subsequent case studies. Likewise, KBT precepts substantially influenced the interview design, as it was clear that subsidiaries within the MNE network were often building upon techniques and knowledge gleaned through the internal innovation network.

The notion of „practice‟ as it was used by the ETF Co manager above became a second emergent theme. The term is actually used in two ways by this manager. The first is to refer to the innovation as a practice (“if you talk about innovation as a practice”), and the second is with regards to innovation involving practices (“you can

create…innovation practices”). I came to realize that the theme of „innovation as a practice‟ was similar to the theme of creating environments or communities which foster innovation. The second way practice was used by this manager seemed similar to the notion of „best practice‟, or at least „common practice‟. Hence, there were certain ways of doing the work of innovation which were common to individuals within the organization. During many of the interviews, several examples of innovation practices were discussed. There were those based on patent searches to generate ways to solve problems, based on the „theory of inventive problem solving‟ of Genrich Altshuller (ETF Co.), encouraging innovation through financial allocation (Lux Co.), engaging customers in problem solving (T-Car), portfolio management (IS Services Co.), amongst many others. Some of these practices were clearly in use across the entire MNE, and likely originated elsewhere in the innovation network, others seemed to be common within industries, diffused by consultants or certification institutes such as the Project Management Institute (PMI), and others seemed much more idiosyncratic to the organization.

In summary, the findings revealed that foreign subsidiaries of western MNEs generally followed innovation practices similar to, at least upon surface inspection, those of their headquarters. Evidence was also found that the development of innovation practices received substantial attention from management and often developed into idiosyncratic norms which shaped both interaction and the structure of innovation activities. Hence, I became interested in studying the phenomenon of innovation practice

transfer and adaptation, and their role in capability development, along with the many management complexities involved in integrating, coordinating and controlling geographically dispersed innovation. This phenomenon is both timely, given the increasing involvement of foreign subsidiaries in MNE innovation networks, and highly relevant to strategy and international business research as innovation capabilities are one of the key cornerstones to competitive advantage. At this point, the relevant literature was reviewed in order to formulate research questions and selected a context, which is described in the subsequent section on sample selection rationale. This phase of the study was completed in August of 2010.