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ELSEVIER Research Policy 24 (1995) 169-184

Going global: the use of ICT networks in research and development *

Jeremy R. Howells
The Judge Institute of Management Studies / Centre for Business Research, Unicersity of Cambridge, Fitzwilliam House, 32 Trumpington Street, Cambridge CB2 IQY, UK
(Final version received October 1993)


Although the process of the internationalisation of Research and Development (R&D) has been partial and fragmentary, many multinational companies are now faced with coordinating and managing a range of R&D laboratories and technical and design centres spread across the world. The use of information and communication technologies (ICTs) has been seen by R&D managers as one means of helping to deal with the problems and issues that have arisen with this expansion of international research networks. However, although communication within the R&D function has been seen as crucial in research and innovation performance, most of the stress in the use of ICT in research until recently has been in improving productivity. The paper explores some of the new ways that companies are using computer-mediated communication systems as a way to improve communication and information flows between dispersed sites and in the new types of work organisation that are emerging. The paper concludes by looking at some of the benefits and problems associated with implementing these new structures and forms of working in R&D.

1. Introduction
The post-war period has seen the gradual expansion and development of overseas research facilities owned by multinational companies. As Pearce [58] has noted, the internationalisation of Research and Development ( R & D ) "has been by no means a persistent or generalised phenomenon" and its progress has varied, for example, according to the sector, firm nationality and time period considered. Data from studies on the overseas expansion of US-owned R & D facilities

* An earlier version of this paper was presented at the PICT National Conference at Newport, Gwent, 23-25 March 1992.

up to the early 1980s have indeed highlighted the slow and lumpy nature of its growth. Few would disagree with the assertion by Patel and Pavitt [57] that R & D and the production of technology remain "far from global", particularly in terms of the lack of integration of the undeveloped South with the concentrations of research and technical capacity of the developed North. Nevertheless, although R & D is not as yet globalised, most would agree that it is undergoing a process of globalisation, albeit in a slow and fragmentary way. There have been a number of reasons why academics have been so sceptical about R & D internationalisation and for its relative neglect by academics of R & D as a focus of study [58]. One main reason is related to a convo-

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J.R. Howells/ Research Policy 24 (1995) 169-184 sion-making associated with research organisation and location as part of a highly rationalised "top down" process based on perfect knowledge, and with the indirect or hidden assumption that such decision-making is a "first time", one-off process. In addition, the R & D decision-making framework is seen to be directly, and closely coupled with, the long-term strategic aims of the firm. On the basis of this perspective the growth and development of R & D abroad is viewed within a highly abstract context; namely, the decision to locate and expand R & D units overseas is therefore assumed to be undertaken by a centralised and optimal decision-making process which carefully sifts all the facts and then makes a rational decision 1. More particularly very little, if any, consideration is given to the historical development patterns of R & D configuration or personal factors in the decision-making process. The hidden assumption is that at each new time-period when decision-making takes place, the existing pattern of R & D can be ignored and decision-making can be taken on the basis of a "clean slate". However, R & D in particular displays very conservative patterns in locational change [35]. Companies are particularly worried about losing or disrupting key scientific, technical and engineering personnel and even short-distance relocations are put off because of the disruption to current research programmes and loss of key staff. Perhaps most important of all is that most firms have very little idea about the true cost and performance of their R & D functions. Many key performance indicators remain unquantifiable, whilst many fixed (such as buildings and equipment) and running (such as communication expenses) costs are frequently subsumed under overhead costs for a total site and separate prorata costs for R & D are not available. Even for

luted line of argument akin to: R & D is vital and unique to maintaining a firm competitive technological advantage; at all costs this should remain secure; the best way to maintain this security is to keep R & D centralised. As Pearce has commented, although the security argument is important "it is not strong enough to provide validation for a viewpoint which excludes consideration of globally dispersed R & D operations" [58]. Although the focus of this paper is on the role of Information and Communication Technologies (ICTs) in the globalisation of R & D , it is important to consider this within the wider context of the organisational structure of research activity and the importance of communication within this process. As such the following section will outline some of the key issues involved in the organisation and functioning of research before the paper moves on to the main focus of the study: the role of ICT in facilitating and affecting the way R & D is organised in large, international multi-site companies.

2. The establishment, organisation and coordination of R&D

This section seeks to outline some of the key issues and basic parameters involved in the organisation, operation and location of R & D activity within major industrial corporations, particularly focusing on the international scale. These issues can in turn be grouped under three main points: (1) the issue of decision-making and rationality in the organisation and location of research; (2) the ongoing debate about the advantages and disadvantages of centralisation versus decentralisation in R & D organisation; and (3) recent pressures for change in R & D . These central topics will be discussed in turn. 2.1. Rationality and decision-making in the location and organisation of R & D Many studies of R & D in the past, particularly from a macroeconomic basis, have treated deci-

1 Interestingly,although this process is often seen as optimal and tightly integrated into the overall objectives and decision-making of the firm, no consideration is given to the fact that a firm might decide upon a sub-optimal decision on R&D if it would then contribute to the optimal configuration for the firm as a whole.

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companies such as British Petroleum (BP), which have taken a lead in collecting and analysing data in R & D , this remains a problem. A more realistic reflection of how R & D is organised and located is evident in the three most common ways in which R & D laboratories are set up abroad [7]. (1) The direct establishment of a new research laboratory on a site either on its own or with existing corporate facilities (termed by Behrman and Fischer [7] as "direct placement"). (2) As an indirect consequence of a firm acquiring an overseas company which has existing R & D units. (3) As part of an evolutionary process associated with overseas manufacturing and other facilities with initial limited technical, design, quality control or process engineering units gradually developing into more formalised research laboratories. Estimates vary as to how much each of these categories represents as a proportion of total overseas R & D growth, although Rondstadt's [64] work suggests that nearly a quarter of overseas R & D establishments were acquired via takeover, whilst Behrman and Fischer [7] estimate that over a half arise through the process of "evolution" 2 Only in the first case can there be said to be an opportunity for a centralised, one-off process of rational decision-making to take place. The acquiring of overseas research laboratories via the takeover of firms from abroad is at best only a secondary element in the overall decision to gain control of such companies. The final main factor is by its nature a very much fragmented and "bottom-up" approach associated with more general objectives of local overseas subsidiaries seeking to gain market opportunities and more autonomy from their parent companies. As such, the decisions taken on this decentralised, incremental basis often have little direct connection with the more centralised objectives of the firm in its worldwide operations.

2.2. Centralisation us. decentralisation

2 Pearce and Singh [59], however, suggest that two-thirds (69%) of all reasons given for the origin of overseas R&D units was that of a direct or "fresh" installation.

A central and ongoing theme in the discussion of how R & D should be organised and located is the debate over centralisation versus decentralisation. This can be seen at two levels: (1) in the physical layout and location of research facilities and (2) in the management of R & D . In the case of the former the arguments for and against centralisation or decentralisation are not new (see, for example, review of government-funded R & D in the late 1950s; [96]) and have been well rehearsed elsewhere [34,49]. In brief, the benefits of centralisation revolve around largely internal benefits in research operation, namely economies of scale and scope and minimum efficient size, good intra-R& D communication linkages and security and strategic control over R & D and technical knowledge [54,69,76, 79,86,88]. By contrast, decentralisation has the advantage of good external coupling and communication linkages with other organisational functions [13]. In addition, a decentralised structure allows the firm to tap into scarce pools of scientific and technical labour, to provide surveillance or "listening posts" in specific localities to pick up host government funding of R & D activities and to allow a less bureaucratic, more focused research staff [25]. Paralleling this debate is whether the management of R & D should be centralised or decentralised [66,76]. At one extreme, a centralised management structure in a large multinational firm could involve all major long-term basic research work being undertaken at one (or several) central research laboratories, with only very limited, short-term developmental work being carried out at the divisional level of the firm. At the other extreme, on a highly decentralised basis, all R & D including new product development could be undertaken at a divisional, business (sub-divisional) or even establishment basis with no centralised corporate R & D facilities and little coordination between the divisions or businesses. Often, as Rubenstein [66] has noted, companies can involve a management style which lies somewhere between the two ends of this centralised/ decentralised spectrum.


J.R. HoweUs/ Research Policy 24 (1995) 169-184

In an international context Behrman and Fischer [8] similarly identified a spectrum of managerial styles relating to R & D management and coordination. They found that the two extremes of the management control spectrum, "absolute centralisation" and "total freedom", were unusual; however, they did find a firm's management style to be at least partially determined by the market orientation of the products they produced. Thus, companies which have become "world market" firms (whose products are manufactured for worldwide distribution) tend to have tightly coordinated and more centralised international R & D activites, whilst "host market" firms (whose products have significant local adaptation for individual host markets) tended to have more decentralised, "supervised freedom" management styles.

certain to see additional opportunities for improvement. There is an almost irresistible creepage from production engineering upstream into design and development. Thus, although the parent company may feel that for reasons of efficiency and standardisation it wants technology to originate with the parent, it will likely find it almost impossible to maintain that position". In the context of labour, there has been a growing recognition of labour shortages in key scientific, technical and engineering disciplines. As noted elsewhere, the Commission of the European Communities [12] estimated that in the US there will be a potential shortfall of 500 000 scientists and engineers in 2010 as a result of demographic trends and the pattern of university enrolment. More recently, the Science and Technology Agency in Japan estimated that by 2050 there will be a researcher shortage of some 480000 people in Japan (or about half of the estimated requirement for researchers by that date [78]). Many of these shortages now evident at a national scale have been recognised by companies at an individual site level for some time. This is particularly true in areas such as the South East region of the UK or the New York metropolitan region, where labour supply problems can be particularly acute. Companies are now seeking to locate R & D centres in a much wider area, including smaller towns and cities, than was previously considered. The search for lead suppliers or customers has also been important in widening the location of R & D units. The growth in external research and technical links both with customers and suppliers has led to the acknowledgement by many companies that they need to locate specialised research and technical teams to engage in collaboration and also to act as listening posts in key technical "hot spots" around the world. Thus Japan has been a growing centre for materials research for European and American companies. Such moves are also evident in growing collaborative links with overseas Higher Education Institutes (HEIs) by major multinational corporations (for example, Upjohn's research discovery centres: [36]).

2.3. Pressures for change and global expansion

A final element that needs to be discussed here are the recent developments in the internationalisation of R& D and other corporate activity. This covers the simple growth in multinational activity of companies and their evolutionary development; the search for labour; the search for "lead" innovative customers and suppliers and managerial and organisational changes. The 1980s have witnessed the continued growth in foreign direct investment (FDI) and associated production and sales networks by major multinational corporations. This continued to grow at record levels throughout the 1980s with FDI outflow amongst countries growing on an annual average basis by $123.4 billion from 1986-88 [39] whilst US manufacturing investment in the European Community alone grew by nearly 80% between 1983 and 1989. The continued development of overseas production facilities has been accompanied by a lagged build-up and development of associated technical, engineering and design facilities, in turn leading to more formal R & D establishments, following the evolutionary pattern of research internationalisation. In this context, Steele [76] notes: "Once some technical capability has been established, domestic scientists and engineers are

J.R. Howells/ Research Policy 24 (1995) 169-184


Lastly, there have been managerial and organisational changes in the structure and operation of R&D. The first of these has been the appearance and development of overseas research laboratories taking a lead role in a particular scientific field or technology area. Thus an increasing number of European companies, including ICI, Hoescht and Roche, have allowed their US R & D operations to take a lead in specific technologies. The second issue is that of more general managerial restructuring and refocusing. Many multinational corporations have sought to sharpen up their operations by devolving power down to their divisional or, below that, business levels. This has also affected how R & D is structured within these companies. Thus some have got rid of their centralised corporate R & D laboratories altogether whilst others have introduced more complex patterns of restructuring. Thus in BP, their centralised R & D laboratory in Sunbury has been cut back, the divisional research laboratory unit within BP Chemicals has been dissolved and instead chemicals R & D has been built up at the main operating plants such as Hull or Grangemouth.

between R& D and other key corporate functions such as production and sales and marketing [85].

3. R&D and communication: challenges and opportunities for ICTs

2. 4. Conclusions: growth and complexity

It is evident that many of these recent changes have led to the growth and increasing complexity of R & D operations over time, associated in turn with a direct increase in the number and dispersion of R & D sites. Interestingly, most of these pressures for growth and dispersion have come from factors largely external to the R & D function itself. The chief elements of change not already mentioned, namely the need to reduce escalating R & D costs (particularly development costs) and cycle times (in some sectors referred to as the "design to build" period) could indeed argue for R & D to remain more centralised in nature, thereby allowing tighter control, more focused research teams and improved R & D communication. The problem with this argument is that although keeping R & D centralised may speed up research times and help reduce costs, in overall terms it may delay the introduction of innovations because of "programme dislocation"

The use of ICTs in R & D has largely followed a more general pattern occurring across companies; namely that information technology (IT) was seen initially more as an element in improving overall efficiency and productivity than as a longer-term competitive weapon. In R & D laboratories in the 1960s and 1970s, therefore, the emphasis was on improving productivity, particularly in terms of the more general administrative and office tasks surrounding research projects [91]. More fundamentally, developments in IT in terms of increasing computer power were also affecting R & D via significant increases in the capacity and speed of calculation and in the expansion in the number and variety of statistical and mathematical software packages. Paradoxically, little attention was paid to automating laboratory or engineering tasks themselves; this came much later with the introduction of Laboratory Information Monitoring Systems (LIMS) and the development of Computer Aided Design (CAD) and Computer Aided Engineering (CAE) systems. These developments therefore mirrored more general office-based trends in IT usage with the emphasis being on information processing rather than in terms of information communication or as a mechanism to facilitate changes in R & D organisation and structure. This lack of stress on using ICTs to improve communication was not because communication was not considered important. A whole stream of studies from the late 1960s onward had emphasised the importance of communication for the performance of technological innovation within firms [23,53,63,68,77,84]. Within this the role of geographical distance, the physical layout of laboratories and the importance of face-to-face contact have clearly been recognised in terms of communication and research performance [2,5, 22,24,29,33,46,65,67,82,89]. The role of geography was therefore important in affecting the volume


J.R. H o w e l l s / R e s e a r c h Policy 24 (1995) 1 6 9 - 1 8 4





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Source: [3, p. 238].

of communication and its quality (i.e. the frequency of face-to-face contact). Work by Allen [1,2,3] has shown how distance can affect the volume of communication between R & D staff, both on a macro- (Fig. 1) and micro- (Fig. 2) basis with the familiar distance-decay pattern of contact links. The importance of good communication, particularly in a highly creative knowledgeand information-intensive activity such as R & D which often combines high levels of uncertainty has therefore been long recognised by companies. Studies of laboratories and research institutes in remote areas and information-poor environments
0.40 0.35 Inter-group communication Intra-group communication "G" 0.30-

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Fig. 2. Probability of c o m m u n i c a t i o n as a function of distance and o r g a n i s a t i o n a l links. S o u r c e : [3, p. 241].

have provided additional support for this view in terms of the scientific isolation of such establishments [4,72]. The maxim for companies during the 1960s and 1970s was therefore to try and keep R & D concentrated as much as possible on a few sites within the "home" country. However, for a number of companies which were already highly internationalised, this was not possible. Four basic options were generally adapted here to ameliorate the problem. (1) Assume the problem did not exist. Although research and technical units were operating overseas, they were seen as being small and involved in adaptive work that did not affect the central thrust of R & D work undertaken in the home base. Hopefully duplication was minimal, some good work overseas might develop and it would cause too many problems (and take up too many resources) to try to coordinate and integrate such work into the main body of research work run by the company. (2) To restrict the overseas spread of research activities to within easy reach of the home base. Steele [76] quotes the case of companies such as Shell, Philips and Brown Boveri undertaking R& D on a multinational but essentially intraEuropean basis. He saw coordination and integration of R & D at this time being only feasible if the laboratories were within an easy one-day commuting distance of each other. This was also confirmed by Granstrand [26] in the case of the Swedish company SKF in the 1960s. (3) An alternative to this was staff secondment. Scientific and technical staff would be sent to overseas laboratories for anything from a few weeks to several years. In many companies this can be still an important procedure, allowing firms to establish a common working ethos and strong personal bonds which can then be maintained via longer-term informal contact. (4) A final option is to go for complete specialisation between research laboratories. As a general rule, increasing research specialisation between research sites can be expected to reduce the need for inter-site communication; conversely increased "research task interdependency" will increase inter-site communication levels (Fig. 3).

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Degree of Inter-Site R&D Task Interdependence

Fig. 3. Relationship between inter-site communication and R&D interdependence.

This option is difficult to achieve even in the most favourable circumstances. Rarely can scientific/technical areas be rigidly demarcated, whilst it often takes many years for certain laboratories to build up "lead" expertise in particular research fields. Moreover, whilst it may overcome problems of communication between R & D sites, it can often exacerbate communication between R & D and other corporate functions. These responses have at best been only stereotypical options to firms. During the late 1970s and early 1980s many corporations, either through gradual expansion or as a consequence of the merger-mania of the 1980s, found their overseas research activities to have considerably expanded. Communication was therefore becoming increasingly important: - to allow some form of coordination between R & D laboratories internationally; to avoid unnecessary duplication and maintain and improve efficiency; to increase information and resource sharing, thereby allowing a wider "research reach" for the company; to avoid laboratory "isolationism" and to allow research to be undertaken on a splitor multi-site basis. The focus on improved inter-site research communication and coordination was also, to some extent, a result of external peer pressure. As such, R & D as a function vis-a-vis the rest of the organisation could not be seen to be running a disorganised and inefficient international operation. Moreover, as companies were beginning to run " R & D audits" [92], the issues of research

duplication and the performance of individual R & D laboratories and teams were being exposed. In addition, with the ever-increasing growth in scientific and technical information, research managers and directors began to realise that information-sharing between sites was necessary, both to improve the department's overall "scanning" abilities and also to avoid possible isolationism between laboratories. Above all, the absolute necessity of undertaking R & D projects co-located on one site was starting to be questioned. Developments from the late 1970s, particularly the spread of corporate computer-communication networks [41], were enabling researchers to interact more effectively "over the line". Paradoxically, this was at a time when international labour mobility in terms of secondment was becoming more of a problem to companies. The issue of "dual-working" households; the increasing importance of access to and stability in schooling for research staff children; and the increasing scarcity and "poachability" of key scientists and engineers (who felt increasingly confident in being able to refuse overseas placements) meant that companies found it harder to move

Table 1 Key network services used in R&D Service Electronic mail Remote systems/ facilities access Computing Specialist equipment/ facilities Database access Comments/Examples Easy to use, widely available, rapid, advantage of asynchronous nature

Remote login to CRAY supercomputer Access to mass spectrometry

Remote access to central database on technical aspects of company's products, e.g. Glaxoline or materials/components used in production File transfer Easy transfer to similar file systems Videoconferencing Becoming more widely available, costs falling; but problems of asynchronous nature Advanced workLimited availability; being developed station facilities and used by a number of key companies, such as Hewlett Packard


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staff around. Instead, companies began to explore ways in which project teams might be built up irrespective of where individual team members were located. The increasing use of, for example, shared databases, electronic mail and latterly video-conferencing and workstation technology (Table 1) has, at least in some organisations, led to companies exploring ways in which research can be undertaken between separate sites. A key issue in the use of these different communication media is their degree of "social presence" [61,71,74] or "information richness" [15,83]. As noted earlier, the high degree of uncertainty involved in R & D work has meant that face-to-face contact with its high media richness (capacity for immediate feedback; number of cues; personalisation and language variety) has remained all important [11,14,16,52,70,81]. Other communication media, such as telephone, letters, memos, or electronic mail have been seen as offering much poorer communication channels. However, more recent studies have indicated that newer computermediated communication systems may have been undervalued by earlier research in terms of their applicability and information richness/social presence levels. Thus in the context of electronic mail, Rice [61] found that managers used electronic mail for scanning and coordination tasks that would otherwise be accomplished less efficiently and effectively by traditional media. Similarly Trevino et al. [83] found that managers rated electronic mail as the most likely to be used for communication tasks involving situational constraints. Rice and Shook [62] therefore suggest that electronic mail should not be compared with traditional, information poor media, but rather can be placed in the middle of the information richness/social presence scales. The "combinational" use of these new ICT media is also of importance and is one of the aspects that it is intended to examine in greater detail in the main phase of the study. To outline some of the experiences as regards the use of ICTs in the context of R & D , three levels of operation will be considered: (1) the use of ICTs in the context of a specific research project undertaken by a team of staff

working in different countries ("cross-border teamwork" 3); (2) the more general application of ICTs in the operation of R & D in terms of shared and distance working and (3) the impact of ICTs on the management and coordination of R & D .

3.1. Cross border R & D teamwork using ICTs

In a sense, the establishment of a scientific and technical team located at several different sites but working on the same project represents the most far-reaching aspect of the use of ICTs in R & D . Some research managers and directors still do not conceive this as an option and at the very least consider it very much as a long-term prospect. However, for many managers crossborder teamwork has become feasible for certain research projects. It would be misleading to imply that this is a widespread option and it is not without a number of preconditions. Criteria or limitations which were seen as important to successful cross-border research work are set out below. (1) The majority of the team has to be known to each other via direct personal contact. (2) The team is ideally divided between a maximum of two or three sites (3) A clearly identified and demarcated research project has to be established at the outset before the cross-border team starts to work. (4) Access to electronic mail, shared databases and remote login is paramount, use of videoconferencing and new workstation technology is also increasingly desirable where possible. (5) Face-to-face contact is still highly significant. Trips by the team to each others' sites remain important and can often be frequent (every fortnight or so for some leading team members, where appropriate). Ongoing research by the author will seek to provide many more parameters for such work (i.e.

3 See William Fike's (President of Ford Europe) letter to The Financial Times outlining the integrated nature of Ford's research operations in Europe ("Ford's fully integrated operations across the EC" Financial Times 05.03.92. p. 17).

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average team size, type of project considered, project length and so on) and most of these "virtual research" teams are, as yet, in some kind of embryonic or experimental stage. However, it is worth noting important "learning experiences" which force companies to consider the option of cross-border teamwork. This can arise most notably when one or more team-members moves mid-term in a project (at any one time a person may be involved in two or more projects or may get promotion), creating a split-site project by default. The special instance of the Gulf War led to many US, and to a lesser extent European, companies banning foreign travel, at least for a time, preventing research staff from taking up posts overseas. In some instances, to avoid delay in the start of a project, the use of electronic mail and in particular videoconferencing was employed to help at least the first phases of the project. The impact of the Gulf War more generally on videoconferencing use was highlighted by a large number of US companies.

and monitoring of pilot plant equipment and instrumentation and access to specialist equipment, such as mass spectrometry facilities [30] in the chemical industry. The spread, development and application of all these services, whilst supporting the creation of inter-site research teams, has also allowed more general interaction by enabling scientists from different countries in the same company to network more freely with one other. It has also allowed remote access to equipment and facilities which previously had to be used by scientists on-site. The overall volume of inter-site personto-person and person-to-machine contact has been increased by the introduction of these services, as well as the more unforeseen, informal communication that electronic mail has brought with it.

3.3. Inter-site management and coordination of R&D

Although the introduction and development of ICTs in the R & D function can pose considerable problems for R &D managers [20], they do allow the potential for improved coordination and management of R & D across sites. Companies are becoming more confident in multi-site management of particular functions; some companies already have alternating lines of command between sites, covering both domestic and international establishments. In addition, companies such as Hoechst have set up steering committees to manage technology on a global basis and this is supported by improvements in international communications. As yet, though, much more work needs to be done by companies on monitoring and assessing their pattern of information flows in R & D before they can adequately use ICT to meet their communication needs. Batson [6] has charted the difficulties faced by R & D management in terms of their information and communication requirements and the application of various computerassisted systems to help in meeting this challenge. The use of management information systems (MIS) in the R & D function appears to have been taken up much later than elsewhere in the organisation [9]. Decision support systems (DSS), pro-

3.2. Shared and distance working in research

The development of private computer-communication networks has, however, allowed more general networking between researchers and their equipment across sites. This has arisen out of the basic provision of a number of services across the network including electronic mail, remote access, access to central databases and file transfer and, more recently, use of videoconferencing and adaption of work station facilities. The importance of electronic mail stemming from its ease of use, asynchronous nature and general informality, particularly between researchers located in different countries, has been emphasised by a number of studies e.g. [73]. File transfer and database access are also crucial in the sharing of information, avoiding duplication, improving the knowledge base of the company and in helping to establish "invisible communities" of research and technical staff spread throughout the country. Remote login and systems access is also increasingly important to research staff. Remote computing is an obvious example here, particularly in terms of access to supercomputers, such as a CRAY. Other examples relate to remote access


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viding a more customised decision support for managers compared with MIS, however, do appear to be playing a more significant role for research managers in a number of industries [38].

4. The relationship between R & D and the information systems technology functions

A key element influencing the evolution of ICT use within R & D is the link between R & D on one side and the Information System (IS) or IT department or function on the other. R & D as a user department has always been seen as a difficult, or at best a different, user-group than other functions of the firm. This difference is further emphasised by certain special characteristics or peculiarities of R & D in terms of ICT use. In contrast to the general IBM operating environments used in most of the rest of the company, R & D has in the past had separate systems or operating environments often based on Digital Equipment VAX systems (together with more unusual systems such as Glaxo's use of Prime computers [19]), and, latterly, UNIX-based systems. These relate to the following: - T h e stress on security and network resilience. This covers not only the potential for unlawful access to data on a project which may be potentially worth many millions of pounds to the company in the future, but also in terms of safe-

guarding data in the event of an accident or network failure. - The "lumpy" and often intermittent nature of R & D communication flows across the network (Fig. 4), ranging from videoconferencing to large-scale data set transfer, involving technical or C A D / C A M interchange where speed and bandwidth are particularly important [44]. This is in contrast to the more routine and regular flows of data originating in other departments and functions of the organisation. - On top of this is the recent decentralisation and internationalisation of R & D itself. I S / T departments have been familiar with handling the demands from production and sales and marketing on an international basis on relatively long time scales. However, for many companies the build-up of research facilities overseas and their consequent ICT demands only really began in the mid-1970s [42]. Against this, though, the inter-site research, design and engineering requirements can be a driving force in the establishment of a viable computer network within a multi-site company [51]. As a consequence of this companies have often treated R & D quite separately for the purpose of I S / T operations. In Glaxo, where Glaxo Group Research Ltd operates as a separate organisation within the company, this problem is ameliorated as it can have its own IT department. However, for other companies the I S / T department has allocated particular staff or set up particular IT












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Fig. 4. ICTs and their volume and speed requirements.

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units specifically focused on meeting the needs of R&D.

5. Strategic change in R&D communication and organisation

As yet the operational and strategic benefits of the use of communications technology in R & D have only been marginally taken up by companies. Despite this slow uptake of ICT in the context of R & D communication, the use of ICTs offers considerable operational and strategic benefits to firms. Being able to operate R & D across sites in a more interdependent interactive and simultaneous fashion opens up the possibility of achieving organisational advantages of centralisation on a decentralised geographical basis. The potential of at least some of the benefits of economies of scale and scope available on a centralised research facility basis can now be gained in a more decentralised structure [43]. Access to specialist equipment, facilities and staff is now possible in many instances via the use of ICT [17]. In addition, it allows research and technical laboratories, which for technical and operational reasons were operated on an isolated, "stand-alone" basis, to become more integrated with the firm's other research facilities [37]. An important example is companies which have to run isolated development test or pilot-plant operations in remote or hostile localities. The case of oil and mineral exploration companies operating in difficult natural environments is one such example. In the past these facilities operated in isolation with infrequent contact with central operations. However, the ability to have direct access (frequently based on satellite communications) with these core facilities in a simultaneous, interactive fashion has now made major changes to the R & D , technical and engineering environment of such companies. Developments in ICT therefore offer a major opportunity for improving the way in which R & D is operated, structured and coordinated within companies. As such, it now becomes feasible for existing or future decentralised R & D structures to obtain the following benefits, which were formerly only gained in a centralised basis.

(1) Economic and resource-based benefits in terms of economies of scale and scope. (2) Access benefits relating to improved interaction with specialist equipment or staff and reduction of isolation. 13) "Time-based" benefits associated with simultude and interactive nature of new ICT facilities [40,75]. (4) Spatial flexibility R & D becomes less constrained in its structure, allowing it the ability to tap into scarce scientific and technical talent (including customers, suppliers and country-specific expertise) and labour. The largely external benefits of a decentralised organisation of research, in particular those associated with better communication and coupling arrangements between R & D and other key corporate functions (for example, production and sales and marketing) and other organisations (customers, suppliers and collaborators), can now be gained without the loss of many of the key internal benefits associated with a centralised R & D structure. As a result of the adaption and development of these ICT technologies and services a number of basic assumptions and projections concerning decentralisation and R & D organisation may be suggested. For example, it might be expected that companies with existing decentralised a n d / o r multinational R & D structures are likely to develop and refine ICT methods more rapidly (in part a "necessity effect") than competitors and gain potential benefits first. Similarly, it might be suggested that R & D structure within companies will be "permitted" to become more decentralised and more task-interdependent through the use of ICTs. Lastly, through the improved integration of R & D allowed by communication technologies, the average size of R & D units may decrease and much smaller research units, "pico units", could appear [8]. How far these developments in the structure and nature of R & D will occur remains to be seen, although potentially it allows a much greater scope and flexibility in the operation and organisation of the research function within the company. A final element here are the implications of


J.R. Howells /Research Policy 24 (1995) 169-184

ICT for the management and coordination of R & D . As noted earlier, companies have operated decentralised multinational R & D operations largely "with their eyes closed". They feel that, on balance, overseas R & D is necessary and outweighs the losses and disadvantages associated with possible duplication of research effort and the opportunity costs in not having a more targeted research approach. The management of R & D was at best minimal (or euphemistically described as "harmonised" management [76] with little, if any, centralised control of overseas research operations. Companies now have the opportunity, via increased coordination and integration of R & D internationally, to have greater and more centralised control of research. However, improved R & D coordination and integration can also occur via more decentralised, less hierarchical networks of management - - "heterarchies" [27,28,31,47,60]. In these more federated networks, overseas research laboratories can take a more participative and sometimes lead role in corporate research operations, as noted earlier.

Fig. 5. Ericsson European Network and main design centres.

6. Conclusions
Developments in ICT in firms, particularly the introduction of advanced private computer-communication networks, have come a long way in recent years [cf. 32,56]. For an increasing number of companies, such as Ericsson in electronics (Fig. 5) and Glaxo (Fig. 6) in pharmaceuticals, it has become a way of life and is an all-important element in the day-to-day international operation and management of major research programmes. The emergence and spread of such facilities as electronic mail, videoconferencing and, latterly, work station technology within firms has been significant during the 1980s [10,18,21,50,87,94,95]. Their use, at least on an informal basis, also appears widespread and companies in turn recognise these informal links as highly important in the R & D process [45,48,90,93]. However, because of this companies are often frightened to take a more strategic, proactive stance in the use of these technologies for fear of disrupting these informal links which will in turn affect the progress of major research projects within the

company. As one manager put it, they were happy to invest in ICTs (inputs) as long as it contributed to supporting the research programme (outputs) of the company and, as long as this happened, he was reluctant to "meddle" in terms of trying to


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J.R. Howells/ Research Policy 24 (1995) 169-184


improve the use of ICTs within the R & D function (i.e. the "black box" approach). It was recognised, however, that this process could not last indefinitely as R & D became ever more important in the company's profile and came under more scrutiny in terms of expenditure and performance. This fear of disrupting research programmes; the "service" stature of IT (being seen as reactive rather than proactive to the demands of R&D) and the general lack of knowledge about communication and knowledge/information processing in R & D 4 explains the general conservative nature and use of ICTs in R&D. It also has to be recognised that key individuals within the R & D department can also have a critical effect on the use of new forms of communication media. In one company, the IT manager suffered from what he termed "the QE2 syndrome". The company had sizeable R & D operations in the UK and the US, with considerable overlap in terms of scientific fields between the laboratories on both sides of the Altantic. Endeavours to improve communication between the two sides were thwarted and delayed by the US R & D manager, who wanted to retain his autonomy as far as possible and saw improved communication as a critical threat to this. For this R & D manager, even communication via the QE2 was seen as too rapid! The availability of the new technologies is less of an issue than the importance of companies being willing to experiment in new forms of work practice and organisational change connected with ICTs. This all-important incremental learning pattern and more general "learning by doing" will be critical in the wider spread of cross-border teamwork and global R & D interaction within companies. Above all, this study will seek to investigate the "combinational" use of these new ICT media in the research process. In the past, studies have sought to treat communication media as individual fields of study and to investigate the potential communication trade-off between

different types of media. However, initial evidence from this study suggests that new computer-mediated systems are being used in a more complementary way to solve and enhance communication links in R&D. Certainly, the increasing pressure arising from the needs of R & D "going global" will provide an all-important stimulus to the take-up and development of these new organisational practices in the 1990s and beyond.

This study is part of an ongoing programme of work at the Newcastle PICT Centre funded by the UK Economic and Social Research Council's Programme on Information and Communication Technologies (PICT). The study is ongoing and the author would like to thank R & D and I S / T managers and staff from the following companies who have provided considerable time and support for the study so far: Amersham International, British Gas, BP, British Nuclear Fuels, Eastman Kodak (including Sterling-Sanofi), Ericsson, Glaxo, Hewlett Packard, ICI, Nissan, Pfizer, Proctor&Gamble, Sandoz, Sanofi (Elf), Shell, SmithKline Beecham, Wellcome.

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4 Information audits [55] in R&D functions are still very unusual and only monitor very broad patterns of information processing and flow.



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