If an MNE wishes to maintain innovation-based firm heterogeneity (being different from other firms), which of the following best describes a potentially successful strategy?
A) Invest much more in a centralized, close-knit R D
B) Spread R D work across different locations and teams around the world
C) Outsource R D to other firms
D) Make alliances with other firms that have strong R D departments

Question

Quizplus · Accepted Answer

Spreading R&D work across different locations and teams around the world allows the MNE to tap into diverse sources of knowledge and expertise, increasing the likelihood of developing unique and innovative products or processes. This also helps the MNE to avoid relying solely on centralized R&D, which can lead to groupthink and a lack of diverse perspectives. Outsourcing R&D to other firms or making alliances with other firms that have strong R&D departments may not necessarily ensure innovation-based firm heterogeneity, as the MNE would be relying on external sources for innovation rather than developing its own internal capabilities. By spreading R&D work across different locations and teams around the world, MNEs can leverage the advantages of different knowledge environments and tap into different talent pools. This can lead to a more diverse and innovative approach to R&D, which can help the MNE maintain its heterogeneity and stand out from competitors. Investing too heavily in a centralized R&D department (A) may limit the diversity of knowledge and ideas, while outsourcing R&D (C) or making alliances with other firms (D) may lead to the MNE losing control over its innovation strategy and potentially becoming too similar to other firms.

If an MNE Wishes to Maintain Innovation-Based Firm Heterogeneity (Being