Functional versus capability-oriented innovation management in multinational firms

This paper argues that innovation management in multinational firms can be enhanced by distinguishing two types of geographically dispersed facilities: capability-augmenting ones and capability-exploiting sites ones. The paper shows that this distinction rather than the established distinction of research sites versus development sites facilitates resource allocation decisions and strategic cooperation with local knowledge providers. An analysis of 8 matched case studies as well as a statistical analysis with 156 R&D sites supports this argument