Performance implications of organisational structure and knowledge sharing in multinational R&D networks

Multinational Enterprises (MNEs) are uniquely equipped to acquire knowledge from external sources because they can access pockets of innovation located throughout the world. MNEs can source knowledge externally through foreign direct investment in R&D, a strategy that has become prevalent during the past two decades. Unfortunately, little is known about the performance implications of external knowledge sourcing through R&D internationalisation, nor have researchers determined how organisational structure and intrafirm knowledge-sharing routines affect innovative performance in multinationals that set up R&D sites abroad. This study examines the effect of organisational structure and knowledge sharing on innovative performance in the overseas R&D units of North American, European and Japanese multinationals. An analysis of data from a survey of overseas R&D site directors in 17 countries suggests that innovative performance is enhanced by the lateral and hierarchical exchange of knowledge but suppressed by bureaucratic coordination and control mechanisms.