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Communication Flows in International Product Innovation

Teams

Rudy K. Moenaert, Filip Caeldries, Annouk Lievens, and Elke Wauters

Recently, we have witnessed a strong growth in the internationalization of many

firms’ product development activities. However, the lack of attention devoted by
scientific research to the management of international innovation contrasts
sharply with the importance attached to it as a cornerstone of international
business success. Although several empirical studies and normative theories have
specified the communication requirements in innovation teams, an empirically
based insight is definitely needed on the communication requirements and re-
quirements that prevail in the complex context of international innovation teams,
in which the participants are located in different company units, countries, and
cultures.
This article addresses the following research question: viewing international
innovation as an interfunctional activity, what are the communication require-
ments an international innovation team is facing, and what are the communica-
tion capabilities (interface mechanisms) that may be adopted to initiate, develop,
and launch the new product effectively and efficiently? An extensive case study
research project was designed to develop a comprehensive theoretical framework.
Over a two year time period, the research team has investigated selected inno-
vation projects in four European multinational corporations.
The analysis of the case study data suggests five requirements that determine
the effectiveness and efficiency of communication in international product devel-
opment teams: network transparency, knowledge codification, knowledge credi-
bility, communication cost, secrecy. To cope with these communication require-
ments, organizations may create firm level capabilities (parallel structures,
cross-functional and inter-unit climate, communication infrastructure, goal con-
gruence) and team level capabilities (core team, team leadership, formalization,
procedural justice). The evidence from the in-depth case study research indicates
that these mechanisms provide a parsimonious and powerful approach to address
the communication requirements in international product innovation teams. After
the information processing framework proposed by Tushman and Nadler [124],
the adoption of these mechanisms is expected to improve innovation effectiveness.
This holds important consequences for the management of international prod-
uct innovation projects. First, the innovating firm must balance centralization and

Address correspondence to Rudy K. Monenaert, University of Ghent,

Faculty of Economics and Business Administration, Hoveniersberg 24,
9000, Ghent, Belgium.

J PROD INNOV MANAG 2000;17:360 –377

© 2000 Elsevier Science Inc. All rights reserved. 0737-6782/00/$–see front matter
655 Avenue of the Americas, New York, NY 10010 PII S0737-6782(00)00048-5
INTERNATIONAL INNOVATION TEAMS J PROD INNOV MANAG 361
2000;17:360 –377

decentralization, employ formal as well as informal strategies, and integrate

ad-hoc and permanent strategies. Second, it highlights the critical role of the
project leader. Given the fact that companies often select the most available
person, rather than the best person for the job, the allocation of light weight
project leaders may create heavyweight problems in international teams. Third,
following the argument in favor of procedural justice, the absence of involvement
may severely hinder cross-functional commitment to international innovation
projects. Fourth, the innovating firm must also actively manage the communica-
tion flows with external parties. Failure to do so may result in flawed specifica-
tions, and a limited understanding about product design and market strategies.
© 2000 Elsevier Science Inc.

Introduction teristics of so-called national innovation systems

[87,89,93,120].

I
ncreased knowledge intensity in many industries
suggests that the future competitive position of
companies is increasingly determined by their in-
novative capacity [6,28,66]. For instance, Franko ob-
served [40], after an empirical survey of 83 enterprises
in six industries, that: “ . . . in sectors where American
firms experienced major losses of world market share
during the decade of the 1970s, U.S. firm’s R&D
intensity was low relative to European and to Japanese
competitors” (p. 460).
Although many scientists have examined the rela-
tionship between a firm’s technological strategy and
its competitive advantage, the external validity of
these studies would seem to be limited as they have
almost always been restricted to the study of this
relationship in a national context [e.g.,
13,50,72,115,116,129]. Thus, Ghoshal and Bartlett [42]
observed that “not one of the over 4,000 studies on the
topic of innovations . . . has focused specifically on
the innovation process in the setting of a multinational
corporation” (p. 499). The lack of attention devoted by
scientific research to the management of international
innovation contrasts sharply with the importance at-
tached to it as a cornerstone of international business
success [23].
Within the emerging literature on the management
of international R&D three streams of research may be
distinguished: 1) the process of internationalization and
localization of R&D [e.g., 23,39,48,53,68,69,82,103],
2) the organization of international innovation pro-
cesses [7,15,42,44,92], and 3) the impact of national
culture on the management of innovation processes
[16,56,62,110]. Within the economic literature, the
internationalization of R&D has recently been
awarded substantial attention. This stream of eco-
nomic research addresses the antecedents and charac-
Although important research contributions have
been made to this emerging field, tangible recommen-
dations tend to be rather scarce. As a consequence,
Cheng and Bolon [14] recently noticed that “business
scholars are presently ill prepared to provide research-
based recommendations on how to manage multina-
tional R&D” [p. 2].
In this paper, the authors focus on the organization
process of international innovation, and particularly
on the communication flows during such projects. We
define technological product innovation as a product
whose development requires that an organization in-
vests human, financial, or technical resources, to ac-
quire new or unknown technologies, or to combine
known technologies in a novel way [81]. A technology
is defined as the practical application of scientific or
technical knowledge [64]. An international product
innovation project is defined as an innovation project
for which the functional responsibilities on R&D, pro-
duction and marketing are not concentrated in one
single country. In view of the subject of this article, it
must be observed that this definition excludes co-
location [43] as a potential integration mechanism.
Research Method
Research Question
Scholars in the field of innovation have traditionally
viewed innovation as an information processing activ-
ity [see e.g., 3,16,26,27,71,104,113,130]. The innova-
tion team obtains information on markets, technolo-
gies, competitors, and resources [113], and translates
this information into a product design and a product
strategy.
Viewing innovation teams as information process-
362 J PROD INNOV MANAG
2000;17:360 –377
BIOGRAPHICAL SKETCHES
Rudy K. Moenaert holds a licentiate degree in applied economic
sciences from the University of Antwerp (cum laude), and an MBA
from the same university (magna cum laude). He earned his doc-
toral degree from the University of Ghent (summa cum laude).
Rudy Moenaert is professor of marketing at the University of Ghent
(Faculty of Economics and Business; Vlerick School of Manage-
ment) in Belgium and Nyenrode University (Center for Supply
Chain Research) in the Netherlands. He is a regular teacher in
executive management programs. He has published in journals such
as the Journal of Product Innovation Management, R&D Manage-
ment, Management Science, IEEE Transactions on Engineering
Management, and the Journal of Management Studies. His current
research interests focus on the international management of product
innovation, the management of innovation programs, the marketing
of product innovations, and Internet marketing.
Filip Caeldries holds a licentiate degree in economic sciences from
the University of Ghent (cum laude), and an MBA from the same
university (magna cum laude). He earned his PhD at Purdue Uni-
versity, and joined the faculty at the Stern School of Business of
New York University (U.S.A.). At present, he is on the faculty of
Tilburg University (the Netherlands). Filip Caeldries has published
in the Journal of Socio-Economics, Journal of Product Innovation
Management, Long Range Planning, Advances in Strategic Man-
agement, and Research in Global Strategic Management. He is a
regular teacher in executive programs. His present research focuses
on the international management of research and development,
strategic management and the globalization of markets.
Annouk Lievens holds a licentiate degree in applied economic
sciences (magna cum laude) and a PhD (summa cum laude) from
the Free University of Brussels. Her research interests and publi-
cations centre on financial services marketing, organizational com-
munication and communication networks in financial service orga-
nizations, and the innovation process of services. At present, she is
a Senior Research Fellow and an Assistant Professor of Marketing
at the Department of Marketing and Marketing Research of Maas-
tricht University.
Elke Wauters graduated as commercial engineer from the Free
University of Brussels (magna cum laude). Subsequently, she con-
ducted a two year research project on international innovation
management, working together with Rudy Moenaert and Annouk
Lievens. She then joined her husband in Saudi Arabia, where she
was active in the Commercial Section of the Brazilian Embassy,
and as a private French tutor to members of the Saudi Royal
Family. Recently, she moved to Singapore where she will be
monitoring the investment interests of Lernout & Hauspie and
Flanders Language Valley Fund.
ing (sub)systems, a successful organizational architec-
ture for managing international innovation projects
suggests matching the information processing capabil-
ities to the information processing requirements [124].
Although the information processing paradigm has
often been used in the study of ‘national’ innovation
processes, it has not yet been applied to an interna-
tional product development setting.
R. K. MOENAERT ET AL.
The extant literature on organizing international
R&D exhibits important additional deficiencies. First,
in most studies the level of analysis is the organiza-
tion. The focal research question concerns the effec-
tive and efficient integration of internationally dis-
persed R&D units [e.g., 11,37,49,69]. However, the
resource allocation for new product development ac-
tivities most often occurs on a project basis [2]. Sec-
ond, most studies are confined to the R&D function.
The ‘national’ studies have consistently shown the
importance of integrated product development, for ex-
ample, an effective and efficient level of cooperation
between R&D, marketing and production
[20,76,77,105,114]. It is difficult to conceive that
cross-functional integration would be unimportant in
an international setting.
In sum then, the research question of the present
study has been defined as follows: viewing interna-
tional innovation as an interfunctional activity, what
are the communication requirements an international
innovation team is facing, and what are the commu-
nication capabilities (interface mechanisms) that may
be adopted to initiate, develop and launch the new
product effectively and efficiently?
Research Method
To examine the nature and the impact of interfunc-
tional cooperation during the international planning,
development, and launch of a new product, a case
study research design was defined. Examining real
situations in detail, this method fits the exploratory
purpose of the research question [10,31,128], enabling
the research team to develop practical guidelines.
Given the research needs, that is, the development of
a comprehensive theoretical framework (a nomologi-
cal network [21]), this could be best accomplished by
the in-depth and in-situ study of real situations.
Over a two year time period, the research team has
investigated four case studies. These four case studies,
all situated in European multinational corporations
[MNCs], were selected through purposive, dimen-
sional sampling [88]. The companies investigated dif-
fered along two dimensions: market type (end con-
sumer vs. business-to-business) and company size
(small vs. big). Previous theoretical and empirical
studies suggest that the nature of the market and the
size of the innovating company influence the organi-
zation of cross-functional interfaces [4,81,126]. The
companies differed widely in terms of size, structure,
and culture. For instance, HouseCare employs more
INTERNATIONAL INNOVATION TEAMS
than 300,000 employees, whereas SteelTech and
FoodCorp employ less than 100 employees. This has
consequences in terms of their R&D staff, for exam-
ple, HouseCare employs a staff of more than 30,000
R&D employees whereas FoodCorp employs only
four employees in R&D. Size is not the only discrim-
inatory variable. For instance, whereas FoodCorp and
SteelTech are comparable in size, the structure and
culture at FoodCorp are highly formalized, whereas
the structure and culture at SteelTech are of a very
informal nature.
Before starting the data collection process, full co-
operation of senior management was secured. Individ-
ual innovation projects were selected as such critical
incidents [38] provide a good vehicle for the in-situ
study of innovation [17,84]. Table 1 shows the four
case studies conducted by the research team. In agree-
ment with the participating companies, a pseudonym
is used. In addition, the subject of the product devel-
opment project is mentioned. A more detailed descrip-
tion is given in Table 2.
For each case study, the research team collected
data by means of 1) desk research [e.g., reports, bro-
chures, market research studies, project notes] and 2)
comprehensive field research interviews. The check-
list for the interviews was based on an extensive
literature study. In each of the four cases, interviews
were organized with teams inside the firm (R&D,
marketing, production, procurement) as well as out-
side the firm (research centers, suppliers, etc.). The
decision to also involve outside parties was necessary
as several of the participating companies intensively
worked together with research institutes, suppliers,
customers (and sometimes competitors) to develop a
new product. Not including outside parties would re-
sult in a biased assessment of the communication
flows.
The transcripts of the interviews were analyzed
using the open coding method outlined by Strauss and
Table 1. Field Sites and Innovation Projects (Critical
Incidents)
Market
End Consumer Business-to-business
Company size
Small FoodCorp SteelTech
(yogurt) (steel coating)
Big HouseCare EuroTruck
(air cleaner) (truck)
J PROD INNOV MANAG 363
2000;17:360 –377
Corbin [119]. Using the data, four separate research
cases were written, followed by a briefing in the
participating companies by the research team. This
briefing enabled the research team to compare the
findings with the insights of the key actors involved,
and to clarify any remaining ambiguities. At the end of
this two year case study research project, a general
feedback workshop was organized, in which all the
companies involved participated.
In this article, we report on the findings of this case
study research. The objective of the present research
concerns the development of a nomological network
of the communication requirements and communica-
tion capabilities that influence the efficiency and ef-
fectiveness of international product development ac-
tivities. At present, research efforts have not
comprehensively addressed this important issue. The
absence of a holistic stance indicates a major short-
coming in the extant literature: “When the [nomolog-
ical] network is very incomplete, having many strands
missing entirely and some constructs tied in only by
tenuous threads, then the ‘implicit’ definition of these
constructs is disturbingly loose: one might say that the
meaning of the constructs is underdetermined. Since
the meaning of theoretical constructs is set forth by
stating the laws in which they occur, our incomplete
knowledge of the laws of nature produces a vagueness
in our constructs” [21, p. 69, emphasis added].
Although the nomological network developed in
this article is grounded in the case study data collected
[119], we decided not to ignore the fragmented theo-
ries and findings published in the extant literature.
Indeed, for the sake of theoretical parsimony and in-
tegration, published theories and evidence in a wide
variety of research domains have been used. It is
precisely the “interchange between theories and em-
pirical research” [59, p. 18] that constitutes the core of
scientific research. In doing so, we aimed to formulate
a parsimonious and generic taxonomy of communica-
tion requirements in international product develop-
ment teams. In addition, the theoretical model formu-
lated on the basis of the case study data relates these
communication requirements to the required commu-
nication capabilities.
Communication Requirements in
International Innovation
The linear communication model [8,101] defines com-
munication as a process in which a source transmits
364 J PROD INNOV MANAG R. K. MOENAERT ET AL.
2000;17:360 –377

Table 2. Concise Description of Innovation Projects (Critical Incidents)

1. FoodCorp. FoodCorp is an independent subsidiary of an international European food company, specializing in soy-based food.
Following several failed attempts, FoodCorp has succeeded in the development of soy-based yogurt. The development and
production occurred in the company’s headquarters, while the parent company’s UK distributor provided the necessary marketing
information.
2. SteelTech. SteelTech specializes in the development of tailor-made sputtered thin films on flexible substrates. In co-operation with
a major German label manufacturer, SteelTech developed a retail anti-theft system. The development concerned a film that could
be used in an anti-theft system to be commercialized by the German company.
3. HouseCare. The HouseCare corporation viewed the development of a new aircleaner as a market-focused innovation. HouseCare
is one of the leading companies worldwide in this industry. The project was formulated to replace another development project
that had failed. The project involved some complex modifications to an existing product, that could not be inserted in the existing
product development portfolio. The project was partly outsourced to an independent design consultant and a Chinese manufacturer.
4. EuroTruck. The top management of EuroTruck, one of the leading European truck companies, wanted to develop a 7.5 ton truck
for the European market. This mid-size segment is very important in Europe, and the company has a very small market share in
this particular segment. Product planning and strategy formulation were centralized at the headquarters, design and assembly
activities were conducted in the design and development center, and the UK market company was one of the major distributors of
the new truck.

information to a receiver through one or more chan-
nels. For communication to be effective, two condi-
tions must be met. First, as regards the information
source, there must the an intent to share information.
Such intent may be absent because the source: 1) is not
able to transmit the information, 2) is unwilling to
transmit the information, 3) thinks the information is
not valuable enough to be transmitted [94]. Second,
effective communication also implies that the infor-
mation transmitted has an effect on the receiver. This
effect may be located at one of three levels (Rogers &
Agarwala–Rogers, 1976): 1) a change in knowledge
(the cognitive component), 2) a change in attitude (the
affective component), or 3) a change in overt behavior
(the conative component). For communication to be
efficient, the intended communication effects must be
obtained at the lowest cost possible.
Several empirical studies and normative theories
specify the communication requirements in innovation
teams. For instance, for information to be used, it must
be perceived as relevant, novel, credible and compre-
hensible by the receiver [84]. Also, it assumes that
there are people, equipment, and procedures that as-
sess and distribute the needed information in a timely
and accurate way [67]. Because international product
innovation involves participants located in different
countries and cultures, an empirically based insight is
definitely needed on the specific communication re-
quirements that prevail in such a complex context. On
the basis of our case study data, a parsimonious and
generic taxonomy is proposed. We identify three ef-
fectiveness requirements (transparency of the commu-
nication network, knowledge codification, knowledge
credibility) and two efficiency requirements (cost of
communication, secrecy).
Transparency of the Communication Network
Transparency is defined as the degree to which the
communication network is sufficiently clear and ac-
cessible, in order to let everyone understand the inputs
and progress made [51]. Limited transparency implies
that members of a network have problems identifying
the relevant persons to transfer information to or to
obtain information from.
Several of the respondents in our case studies indi-
cated that, even with a limited number of internation-
ally dispersed units, the transparency of the interna-
tional communication network levels off rapidly. A
network of five units involves 10 dyadic links, a
network of 10 units involves 45 dyadic links, and a
network of 20 units has 190 dyadic links. Stated oth-
erwise, the transparency of a communication network
decreases with increasing levels of complexity. Be-
cause the initiation of an international innovation
project is often characterized by a high level of ambi-
guity, the development of a transparent communica-
tion network often proves to be problematic. Not sur-
prisingly then, the literature on innovation refers to
this phase of the product innovation life-cycle as the
‘fuzzy front end’ [85,112].
Knowledge Codification
Researchers in the field of international R&D have
re-discovered the early work of Polyani [96]. Accord-
ing to Polanyi, some knowledge may be ‘tacit’, that is,
it may be difficult to codify. Codification is defined as
the individual and collective processes through which
knowledge and experience may be structured and
made explicit [9]. Although tacit knowledge is often
INTERNATIONAL INNOVATION TEAMS
associated with knowledge that is specific to an indi-
vidual (e.g., craftsmanship may be difficult to trans-
fer), problems of codification may also be observed
with knowledge that is specific to a team, a company,
a group to which a company belongs, or a network of
partners and alliances in which the company is em-
bedded [6].
The development of new products in an interna-
tional context often impedes the process of knowledge
codification. First, the different units and functions of
an organization develop an idiosyncratic language
[79], subculture [70], and a way of exploring and
analyzing the environment [61,127]. This is an impor-
tant problem for companies growing via mergers and
acquisitions. Evidence shows that acquisitions to real-
ize growth explain much of the internationalization of
R&D [23]. The process of growth via acquisitions is
often problematic as the resulting decentralisation of
innovation efforts endangers the implementation of
geographically concentrated innovation structures re-
quired by the constant “ . . . negotiation, renegotiation,
and dependence on achieved understandings as the
basis of achieving common reinterpretations of new
evidence and opportunities” [118, p. 84]. Second, the
results of R&D activities are inherently difficult to
codify [3,9,27]. Third, international differences in lan-
guage, culture and context, provide another impedi-
ment to codification. Even when translation is feasible,
language and related cultural ideosyncracies may lead
to unexpected interpretations [45]. Both the theoretical
and empirical literature [e.g., 35,55,102,109,122,123]
and the anecdotal anthologies [e.g., 5,100] on this
subject are numerous.
As regards the management of international inno-
vation processes then, the relative abundance of de-
velopment work in subsidiary units suggests that such
R&D tasks may be economically de-linked from head-
quarter strategic decision-making centers. The geo-
graphic decoupling of product development tasks is
predicated on the need for high levels of information
provision to the local manufacturing, marketing and
sales functions [58]. Stated otherwise, because the
intra-organizational task interdependencies are local-
ized, product innovation tasks will be performed in
close proximity to the centers of production and con-
sumption [e.g., 58,78]. Thus, Lund [74], in a national
survey of the locational determinants of R&D site
selection decisions, finds that several firms locate
R&D units near manufacturing sites because the de-
velopment of product prototypes requires close coop-
eration and coordination between manufacturing facil-
J PROD INNOV MANAG 365
2000;17:360 –377
ities and R&D personnel. To illustrate, SteelTech’s
R&D facilities and those of a major customer are only
25 kilometers apart, resulting in a significant reduction
of the transaction costs associated with coordinating
their R&D program. “When SteelTech produces a
sample at 2:00 p.m., we have it available for testing at
3:30 p.m. Often, SteelTech’s personnel stay with us
while we’re testing the sample. They have all the
information available almost immediately”.
The localization of task interdependencies may use-
fully be explained using von Hippel’s [125] sticky-
data thesis. Development tasks will need to be per-
formed in close geographic proximity of demand due
to: 1) the high degree of data stickiness associated with
localized user requirements, 2) the relatively low costs
of duplication and diffusion associated with the mature
technologies in use at the local innovation unit [125],
and 3) the localized investment in complementary data
needed to establish resident absorptive capacity [18].
Given the relatively high degree of mobility of the
technologies in use then, the problems of knowledge
codification associated with localized user require-
ments suggests locating the locus of innovation next to
the sources of customer demand.
Problems of knowledge codification in international
product innovation projects are key to understanding
and optimizing the choice of geographic location of
innovation activities. That is, the geographical location
of innovation tasks is strongly determined by the costs
of data codification, replication and diffusion, relative
to the cost of transferring the locus of problem-solv-
ing. More specifically, the locus of problem-solving
will be found in that geographical location where data
and problem-solving capacity can be brought together
at the lowest cost.
Knowledge Credibility
Previous research on ‘national’ innovation projects has
shown that cross-functional interfaces are often em-
bedded in a negative climate [114]. Such a climate has
a strong negative effect on the quality of cross-func-
tional communication. It reduces the credibility of
received information, and consequently the receptivity
towards this information [25,81,84]. In an interna-
tional context, cultural stereotyping may further dete-
riorate the attitude units hold vis-à-vis each other.
Especially the relationship between headquarters and
the foreign subsidiaries tends to be sensitive to this
process.
Because of the commonality in the scientific back-
366 J PROD INNOV MANAG
2000;17:360 –377
ground of scientists and engineers, achieved through
their training and their professional career, some
scholars argue that this problem is less important in the
context of international R&D teams [23,41,63]. Three
remarks must be made concerning this argument. First,
from the perspective of integrated new product devel-
opment, an innovation team does not only consist of
scientists and engineers. Second, recent theoretical and
empirical cross-cultural research shows that scientists
and engineers are not immune to the influence of the
ethnic culture to which they belong [32,54,56,62,75,
82,90,110].
Third, culture must not only be understood from an
ethnic point of view [55], but also from an organiza-
tional point of view [108]. Consistent with earlier
studies in this field [24], several of our case studies
show that these “socio-cultural qualities that develop
within organizations” [111, p. 344] may strongly differ
between the departments and the subsidiaries of one
company. In sum then, these arguments suggest a
problem of knowledge credibility in the context of
international innovation projects. Interestingly, at
SteelTech knowledge credibility was not perceived to
be an important problem as many of the protagonists
in the new product development process at SteelTech
(including its network of external partners) had all
graduated from the same university department, thus
sharing a similar ‘imprinting’.
Cost of Communication
The distance between team members is an obvious
barrier to interpersonal communication. The seminal
research by Allen [3] showed that the probability of
two R&D professionals communicating with each
other strongly depends on the distance separating
those professionals. Thus, Allen found a five percent-
age likelihood of weekly communication between two
engineers or scientists who are located 30 or more
meters from each other. He concluded that “For
weekly contact, it is only within the first thirty meters
that separation has any real effect on the probability of
communication” [3, p. 240].
Observing this critical distance of thirty meters, one
might be tempted to conclude that the problem of
distance in international communication is a ‘non-
issue’. However, one of the early studies in this field
concludes that the frequency of communication be-
tween a central research laboratory and a foreign sub-
sidiary further declines exponentially with distance.
The geographically nearest units communicated ten
R. K. MOENAERT ET AL.
times more with the central research laboratory than
the more distant units [57]. In a study of 150 research-
ers belonging to the same company, Tomlin [121]
concluded that the likelihood of communication be-
tween two researchers working at different locations,
and working in different departments and on different
projects, was less than 0.2%. If two persons worked on
the same project, the likelihood increased to 23%. If
they worked in the same department the likelihood of
communication was 15%.
The innovation capacity of a firm is determined by
the cohesiveness of the communication flows linking
individual competencies [18]. Thus, there is the need
for frequent, direct communication in order to build a
trust relationship [22,36]. However, the costs, ex-
pressed in money as well as time, associated with
personal communication in international new product
development teams, may become prohibitive. Time
and cost constraints may create a high degree of re-
source uncertainty in complex innovation structures
involving multiple geographically separated units.
Thus, Egelhoff [30] observes that transnational net-
work structures “ . . . need unusually high amounts of
nonroutine-reciprocal information-processing capacity
in order to respond to the variety of changing oppor-
tunities. [T]he various horizontal information-process-
ing mechanisms that provide this kind of capac-
ity . . . are people intensive, in the sense that they
employ large amounts of managers’ and key employ-
ees’s time. They are costly and difficult to control
when contrasted with more routine and sequential
information-processing mechanisms” [30, p. 363].
Anecdotal evidence may be found in a (nonrepre-
sentative) sample of companies with geographically
dispersed R&D-units in which it was found that trav-
eling expenditures amounted to three to seven percent
of the total R&D budget [25]. Such costs are also very
visible to the organization, e.g., travel tickets and
expenditures, absence in the office. The companies in
our study all attempted to economize on international
meetings and face-to-face conversations. Alternative
modes of communication were therefore often used.
To illustrate, the implementation of a videoconferenc-
ing system led to a 75 percentage reduction of the
innovation traveling budget at EuroTruck. However,
the capacity of information technology to reduce the
level of resource uncertainty will likely be limited as
“ . . . its viability and effectiveness will depend criti-
cally on the robustness of the underlying social struc-
ture. This implies that one has to be careful in substi-
tuting face-to-face ties with electronic ones. It is vital
INTERNATIONAL INNOVATION TEAMS
to maintain a critical ratio of face-to-face to electronic
interaction” [91, p. 304, see also 25].
Secrecy
The innovation activities a company deploys are often
of great strategic importance. Secrecy is best assured
when these activities are geographically concentrated
[24,99]. When an organization develops innovation
activities in multiple geographical locations, it will
invariably try to limit information leaks. The interna-
tionalization of a firm’s activities increases the likeli-
hood of information leaks. Such information leaks
may lead to substantial opportunity costs: competitors
may develop a pre-emptive strategy, or may reduce the
lead time needed to launch a competitive product in
the market place. Therefore, certain information may
be concealed because of strategic reasons. To illus-
trate, in FoodCorp, the German subsidiary was not
informed about the new product development project,
in order to prevent the information from reaching
customers and leaking to the competition. The policy
not to inform subsidiaries often belongs to the ‘admin-
istrative heritage’ [7] of some companies. This was
clearly the case with HouseCare where important market
information was generally not shared with suppliers.
Communication Requirements: Synthesis
Thus, using the information processing framework,
developed by Tushman and Nadler [124], two major
communication requirements have been identified.
The effectiveness requirement is determined by the
transparency of the communication network, the
knowledge credibility of the various members of the
communication network, and the codification of the
knowledge that must be communicated. The efficiency
requirement is determined by the cost of international
communication and knowledge secrecy. Each of these
elements may also be viewed from a cost perspective.
Except for the cost of international communication,
the other four elements relate to opportunity costs.
Limited transparency of the communication network
implies that the relevant members of the network may
not be identified, and information does not reach those
needing it. A low level of knowledge codification
implies that useful information may not be encoded. A
low level of knowledge credibility implies that com-
municated information may not be used. A low level
of information secrecy implies that competitors may
take advantage of knowledge generated in the firm.
J PROD INNOV MANAG 367
2000;17:360 –377
Proposition 1: The communication requirements
in an international new product de-
velopment team encompass both
effectiveness requirements [maxi-
mization of network transparency,
knowledge codification and knowl-
edge credibility] and efficiency re-
quirements [given the effectiveness
requirements, minimization of
communication cost and maximi-
zation of secrecy].
Communication Capabilities in International
Innovation
To organize cross-functional communication flows in
an effective and efficient way, companies have devel-
oped several interface mechanisms. These interface
mechanisms may be viewed as communication capa-
bilities [124]. Two types of capabilities may be dis-
tinguished, for example, firm capabilities and team
capabilities.
Firm Capabilities
Parallel Structures. De Meyer and Mizushima
[23] point out that “[T]he choice of where to position
oneself on the scale from absolute freedom to absolute
control appears to be the central management decision
in global R&D management” [p. 140]. In practice, this
problem is often worked out by the design of a parallel
structure [12], very often using an international steer-
ing committee [33,45]. In our field sites, these inter-
national steering committees were defined along tech-
nological disciplines and/or product line dimensions,
and operated parallel to the “formal hierarchy and
structure” [12, p. 9]. In addition, they were sometimes
also differentiated in terms of the expected output: 1)
decision making for an innovation project or a pro-
gram, 2) strategy formulation for the company, or 3)
gatekeeping. To illustrate, at FoodCorp, the new prod-
uct development process is structured around two
teams: a technical R&D team and a market-oriented
innovation team. The yogurt project emerged in a
discussion between the two teams.
Parallel structures, such as those at FoodCorp, do
not only assume an important part in the planning of
innovation activities, but they also serve as an impor-
tant platform for information transfer within the com-
pany. First, these activities create an informal network
of persons who have periodic face-to-face meetings
368 J PROD INNOV MANAG
2000;17:360 –377
with each other. The members of international steering
committees have the opportunity to build an interna-
tional and interfunctional orientation. Moreover, these
steering committees enable the participants to share
information regarding their personal, task-specific
communication network [69]. Second, participants be-
come involved in the definition and determination of
the innovation strategy. The structuring and formal-
ization of an innovation project during the “fuzzy front
end”, with the intention of optimizing the communi-
cation flows, often turns out to be a contradiction in
terms. This phase of a project often needs an informal
and decentralized approach [113]. It is precisely one of
the merits of the adoption of parallel structures that the
involvement of parties belonging to various functions
and units, subsequently creates project commitment
and crossfunctional harmony.
Proposition 2: The adoption of parallel structures
enables the innovating firm to
lower communication costs, main-
tain information secrecy, and im-
prove network transparency,
knowledge codification and knowl-
edge credibility.
Cross-functional and Interunit Climate. Next to
formal integration mechanisms (such as parallel struc-
tures), MNCs often rely on the firm’s organizational
climate as a means for achieving normative integra-
tion, that is, consistency in purpose among disparate
actors. Thus, it is not uncommon for cross-functional
innovation teams to take time out to build organiza-
tional cohesion via personnel assignments, task-forces,
reward systems, etc.
However, cross-functional teams may not enjoy to-
tal freedom in designing their transactional structure as
they are anchored to the firm’s overall administrative
heritage. To illustrate, at FoodCorp, an antagonistic
relationship between the central R&D-department of
the parent company and the rest of the company had
prevailed for many years. This was mostly because of
the self-willed behavior of a former R&D-manager,
with the process of cultural stereotyping acting as a
reinforcement. For example, some employees of Food-
Corp mentioned that the Dutch management style of
the R&D manager did not match with the Flemish
working culture. Obviously then, increasing the effec-
tiveness and efficiency of FoodCorp’s innovation units
requires a proactive approach to using the cross-func-
tional climate for the purpose of normative integration.
R. K. MOENAERT ET AL.
Recently, the existence of a harmonious crossfunc-
tional climate has significantly enhanced the credibil-
ity of all parties involved. Argues one managers: “It is
a matter of trust. First they have to evaluate you. That
takes about a year. You can promise them anything.
But will you deliver? They have to be able to see what
you’re worth. You can only communicate when they
trust you”. Thus, the following proposition is postulated:
Proposition 3: A harmonious cross-functional and
interunit climate improves knowl-
edge credibility in international
product innovation teams.
Communication Infrastructure. The new com-
munication media have a great impact on both the
effectiveness and efficiency of cross-functional com-
munication flows. Video conferencing and uniform
direct access documentation systems provide effective
modes of communication at low variable cost. To
illustrate, at FoodCorp, the deployment of a commu-
nication infrastructure involving, among others, a sys-
tematic information classification and retrieval system
has generated significant cost savings by limiting un-
necessary (i.e., repetitive) cross functional communi-
cation flows. In addition, the low variable cost of these
new communication media enhances the organization
of meetings and the sharing of information that would
never take place otherwise. Thus, such communication
media provide additional opportunities for team mem-
bers to exchange information.
However, consistent with earlier research [25], sev-
eral of our case studies suggest that personal relation-
ships and trust between employees are a prerequisite
for electronic communication to be efficient. In the
absence of regular face-to-face contacts which help to
maintain a relationship, the usefulness of electronic
communication media will be limited [25,69]. Further-
more, electronic communication is at present very
suitable for making appointments or schedules, but not
really for moral support or emotional issues. Finally,
the use of electronic communication may lead to in-
cidental information leaks. Thus:
Proposition 4: The deployment of a communica-
tion infrastructure enables the inno-
vating firm to lower communica-
tion costs and improve network
transparency, but may decrease in-
formation secrecy in international
product innovation teams.
INTERNATIONAL INNOVATION TEAMS
Goal Congruence. A critical element determining
team integration, the case studies suggest, concerns the
level of goal congruence between separate units. An
important (and often institutionalized) impediment to
team integration is the choice of performance param-
eters which are used to assess local operating units. In
the absence of long-term congruent unit goals, empha-
sis is often put on local and operational activities and
short term projects, reflecting the standards on which
local units are evaluated. Paraphrasing Gresham’s law,
“operational activities drive out strategic activities”.
Also, in light of the standards to which they are
evaluated, managers of market companies and sales
subsidiaries units often prefer riskless, cheaper, incre-
mental and more profitable projects. A group manager
of HouseCare summarized this succinctly: “Three-
year managers, four-year plans”. Given the rapid turn-
over of product and market managers in international
firms (often less than three years), these persons tend
to postpone radical innovation projects.
Goals must be formulated for each unit such that
global optimization rather than local optimization is
encouraged. To illustrate, FoodCorp’s radical new
product development project (soy-based yogurt) had
experienced several false starts (covering a five year
time period). FoodCorp’s management attributes its
failure to get the new product in the market to prob-
lems of communication credibility and transparency
resulting from the absence of goal congruence across
the units involved. “We were all working in different
directions. We simply didn’t communicate very well”.
Later, goal congruence was increased using several
formal management procedures eventually resulting in
an effective communication network. At SteelTech,
the establishment of goal congruence even involves
external parties. Thus, one of SteelTech’s major cus-
tomers had some of its end customers visit SteelTech so
that these end customers were aware of the technological
complexities involved in the production process. This
ensured convergence in expectations across all parties.
Proposition 5: The formulation of congruent unit
goals improves knowledge credi-
bility and network transparency in
international product innovation
teams.
Team Capabilities
Core Team. Locational differences often spawn
linguistic, cultural and contextual problems. Such dif-
J PROD INNOV MANAG 369
2000;17:360 –377
ferences create noise in the communication process.
Therefore, short and direct communication channels
are preferred over long and indirect channels. Because
of the complexity of the communication network, a
central and commonly accepted connection point is
required. In our study, we observed that the creation of
a multifunctional core team is critical to optimizing the
information transfer within the project [60]. A core
team is defined as a limited group of people respon-
sible for the interfunctional management and coordi-
nation of project activities.
In EuroTruck, some of the problems were blamed
on the absence of a crossfunctional, interunit core
team. “The links between different people are rather
dissatisfying: because we’re such a big company, it’s
so difficult to hold everybody together. In this project,
for example, I would definitely have preferred to
have—from the beginning—a cross-functional group
of people . . . and somebody from product planning to
hold all this together. It’s product planning who should
order the jobs, but they should have the support from
all those people already from the very beginning when
they are preparing for strategic decisions”.
The use of a core team provides an organizationally
defined substitute for the two-step information diffu-
sion process in innovating companies [3]. However,
there is an important difference: whereas the two-step
process, as it is described in the present literature,
essentially involves the diffusion of external informa-
tion in the company, a core team in a MNC is crucial
to the adequate diffusion of internal information
within the company. In addition to communication
requirements, some other factors also point in the
direction of a core team. Indeed, big innovation teams
are often characterized by a lack of involvement of
some team members [106] and a bad interfunctional
climate [114]. Thus, we postulate the following prop-
osition:
Proposition 6: The implementation of an interna-
tional, cross-functional core team
enables the innovating firm to
lower communication costs, main-
tain information secrecy, and im-
prove network transparency,
knowledge codification and knowl-
edge credibility in international
product innovation teams.
Team Leadership. Earlier research has shown that
the choice of the team leader is an important determi-
370 J PROD INNOV MANAG
2000;17:360 –377
nant of innovation success. Thus, a research study on
communication flows between scientists revealed that
the relationship between a scientist and his/her head
may help to bridge geographical distance [121]. A
good project manager possesses a multifunctional and
multidisciplinary knowledge, and is met with great
respect by his colleagues [16,33,114].
The role accomplished by the project leader in in-
ternational innovation projects is essential. This per-
son is the driving force, maintains the project conti-
nuity as well as the integration of several internal and
external functions, prospects and selects the necessary
competencies, and bridges the cultural differences and
eventual differences in time goals between the units
involved, and monitors and controls information
flows. Project leaders also possess the necessary in-
depth experience of how to run a complete product
development process in their MNC. This is a good
example of tacit knowledge. Such process-related
knowledge has been accumulated through experience,
and is difficult to codify. Or as someone said: “After 5
years, you know who the players are, and you have
direct contacts”.
Strong leadership often increases the transparency
of the communication network as participants in the
innovation project will use the team leader as the
principal means for information diffusion. Argues one
senior manager at FoodCorp: “[the teamleader] has
been managing distributors and agents, and therefore
he is the person who knows what is happening in those
countries. And because we have a good contact with
him, he knows what is happening in our country, so
he’s really the link between all the countries”.
At EuroTruck, the Chief Project Managers are se-
lected on the basis of their experience: the average age
is between 40 and 50 years. However, small compa-
nies often do not have a pool from which they can
select a heavy-weight project manager. At SteelTech,
this problem was solved by using TTM-management
(Time-To-Market). In this company, a senior person is
appointed as ‘godfather’ to a project. This person is
the prime contact person for all involved in the inno-
vation project. This TTM-system generates the sup-
port needed from the top management. The creation of
the TTM-position has created more transparency in the
communication flows. In addition, horizontal integra-
tion is also achieved: it creates commitment, since
everybody will need something from the inquiring
party in the longer run.
R. K. MOENAERT ET AL.
Proposition 7: The appointment of a heavy weight
team leader, lowers communica-
tion costs and improves informa-
tion secrecy, network transparency,
knowledge codification and knowl-
edge credibility in international
product innovation teams.
Team Formalization. Unlike past innovation stud-
ies [46,47], more recent studies have repeatedly shown
that formalization contributes to interfunctional com-
munication [86,107]. This implies that team responsi-
bilities have to be defined explicitly. Thus, a certain
level of project protocol is needed to avoid conflicts
and inefficiencies.
The formalization of innovation activities is an im-
portant lever to the improvement of communication
between R&D, marketing and production in an inter-
national product development project. First, formaliza-
tion compels all parties involved to exchange infor-
mation at regular time intervals. In the absence of
formal mechanisms, such as action plans and project
review meetings, communication depends on the dis-
cretionary (and therefore ad hoc) behavior of the team
members. Second, the content of such discretionary
behavior is to a great extent determined by the avail-
able organizational slack. Our data show that even in
big firms, limitations in manpower and priorities to-
wards local activities often severely bound the inten-
tion to share information.
To illustrate, at SteelTech, most of the communica-
tion flows are routed over a single manager. Given the
enormous workload within the organization, this man-
ager has no time to generate sufficient physical records
that can be consulted by others at a later stage. “It
would be a disaster for SteelTech if [manager] were to
be promoted to another job within the parent compa-
ny”. As a consequence, SteelTech is currently attempt-
ing to increase the codification of all acquired knowl-
edge by formalizing several of the procedural aspects
of the innovation project (e.g., documentation, proto-
cols).
Although an informal work environment and a cer-
tain degree of autonomy are essential to product de-
velopment, functions, responsibilities, and decision
points have to be clearly settled throughout the project
life-cycle. “Once autonomy is no longer directed by
the organization, it has little more than a random
chance to be relevant to the organization” [34, p. 91].
Other elements that can be formalized are: a stringent
follow-up of the documents, and the setting of dead-
INTERNATIONAL INNOVATION TEAMS
lines and goals. Team members know where an as-
signment comes from, but because of network com-
plexity and the consequent diversity in initiatives, they
often do not know the ‘why’ of a particular assign-
ment. Observed one interviewee: “There are too many
kings in the process”.
Proposition 8: Formalization of team processes
lowers communication costs, im-
proves information secrecy, net-
work transparency, knowledge
codification and knowledge credi-
bility in international product inno-
vation teams.
Procedural Justice. Our case studies support the
research findings of Kim and Mauborgne [65] con-
cerning decision-making processes in MNCs, that is,
the acceptance and successful implementation of a
decision is strongly determined by the proactive in-
volvement of all parties that are affected by this deci-
sion. The authors refer to this as ‘procedural justice’.
In an international innovation context, procedural
justice is very important in the planning phase. Em-
pirical studies indicate that the success of an innova-
tion project depends on the effectiveness of the new
product development activities during the early phase
of the project life-cycle [19,29,73,85,95,114]. As a
consequence, the early and proactive involvement of
the various functional parties is essential to the suc-
cessful translation of a new idea into a commercial
success [113].
For example, EuroTruck’s sales had declined in the
mid-size segment of the market, and all previous prod-
uct introductions in this market segment had failed.
The development of EuroTruck’s new mid-size truck
suffered from a lack of trust and unwillingness to
cooperate between the marketing subsidiaries and the
headquarter’s central planning unit as the decision to
build the new truck was viewed as a unilateral head-
quarter decision. Indeed, one of the most important
marketing subsidiaries for this new product first heard
about some key decisions concerning this project via
the Financial Times. “We read about our future prod-
uct strategy in a newspaper”. Not surprisingly then, the
headquarter and the subsidiaries of EuroTruck were
very suspicious vis-à-vis the information they received
from each other. Ironically, both parties held identical
misconceptions of each another. Although Euro-
Truck’s headquarter and its local subsidiaries consid-
ered the after-sales service to be of equal importance
J PROD INNOV MANAG 371
2000;17:360 –377
as the actual sale of the truck itself, they accused each
other of paying too much attention to “selling pieces of
metal”.
Problems during the planning phase tend to create a
‘lock-in’, that is, many interface problems that mani-
fest themselves during the development and the launch
phase may be explained by poor communication dur-
ing the planning phase. Our case studies suggest that a
major source of problems concerns the non-involve-
ment of relevant units and individuals during the prod-
uct specification and strategy formulation activities.
Not involving key parties during the start-up of the
project means this project will later be perceived as
being “thrown over the wall”. This raises suspicion
towards the persons who initiated the project and its
specifications. Subsidiary units would seem to be es-
pecially suspicious towards headquarter-initiated new
product ideas.
Proposition 9: Procedural justice, through early
involvement, increases network
transparency and knowledge credi-
bility in international product inno-
vation teams.
Model
The analysis of the case study data has suggested five
requirements that determine the effectiveness and ef-
ficiency of communication in international product
development teams: network transparency, knowledge
codification, knowledge credibility, communication
cost, secrecy. To cope with these communication re-
quirements, organizations may create firm level capa-
bilities (parallel structures, cross-functional and inter-
unit climate, communication infrastructure, goal
congruence) and team level capabilities (core team,
team leadership, formalization, procedural justice).
The evidence from the in-depth case study research
indicates that these mechanisms provide a parsimoni-
ous but powerful approach to address the communi-
cation requirements in international product innova-
tion teams.
Following the information processing framework
proposed by Tushman and Nadler [124], the adoption
of the mechanisms outlined in proposition 2 should
improve organizational effectiveness. Concerning the
dimension of organizational effectiveness in interna-
tional new product development, the companies in our
sample employed the criteria identified by Clark and
Fujimoto [16], that is, product quality, development
372 J PROD INNOV MANAG
2000;17:360 –377
productivity and lead time. Thus, the following prop-
osition is formulated (see Figure 1):
Proposition 10: The adoption of the communica-
tion capabilities specified in prop-
ositions 2 through 9 will contrib-
ute to the success of an
international new product devel-
opment project, as measured by
the quality of the product, the pro-
ductivity of the development, and
the lead time to market.
Management Implications
Managing in a Non-Linear Fashion
The implementation of the mechanisms identified in
the case study research may not be easy as the design
of effective and efficient communication flows in in-
ternational product development teams often implies
the simultaneous implementation of seemingly oppo-
site strategies. First, although some integration mech-
anisms favor centralization (e.g., core team, team lead-
ership) other integration mechanisms suggest
decentralization (e.g., procedural justice, parallel
Figure 1. Communication Flows in International Product Innovation Teams: Propositional Framework.
R. K. MOENAERT ET AL.
structures). Second, some integration mechanisms for-
malize organizational behavior (e.g., team formaliza-
tion, goal congruence), whereas other integration
mechanisms focus on an informal approach (e.g.,
cross-functional and inter-unit climate). Third, al-
though team capabilities are implemented on an ad-
hoc basis, firm capabilities tend to be deployed on a
permanent basis.
Thus, in line with earlier evidence, the relationship
between an organizational design variable and its re-
sult is seldom linear [34,85,113]. Observes one re-
spondent: “It is very productive when you always
know exactly who to turn to during a product devel-
opment project, and when at the same time you can do
this within an informal structure when necessary”.
Ignoring the fact that structuring communication in
international product development teams must not be
approached in a unidimensional way, may lead to
problems. One of the marketing employees of a Eu-
ropean subsidiary of EuroTruck describes the prob-
lems that result from overrelying on a centralized
approach: “The initiative for the product definition and
launch was to a large extent centralized at the group’s
headquarters. If we are shortcutting the system suffi-
ciently, we can react to it. But by definition, it always
INTERNATIONAL INNOVATION TEAMS
stays a reaction”. In a similar vein, the project coor-
dinator at EuroTruck observed that the rigorous appli-
cation of the highly formalized and detailed global
development process sometimes curtailed the creativ-
ity and the flexibility of the innovation team.
In international new product development projects,
small and medium-sized companies may benefit from
scale and resource restrictions, for example, size of the
communication network, co-location, informal work-
ing environment, and flexible role definition. For in-
stance, the parent companies of FoodCorp and
SteelTech were big international enterprises. Employ-
ees of both enterprises noticed that persons working in
a small company have to operate within a creative,
non-stable context. They acknowledged that they
would not perform as well in the parent company.
However, some adverse effects may also result. For
instance, the lack of formalization often creates prob-
lems in complex international projects: the euphoria
and the frequent communication during the start are
gradually replaced by a situation of lethargy and oc-
casional communication. Someone from SteelTech
summarizes it this way: “Because of the boundless
optimism at SteelTech, in the beginning of the project
everyone is convinced that the job will be accom-
plished within six months, while in fact everybody
knows that the project will need four years. And this is
SteelTech’s Achilles’ heel: the management of com-
plex, long information flows is just not good enough”.
Leadership in International Teams
The role of the project leader is critical. However, very
often, we notice that due to 1) personnel restrictions
and 2) priorities towards activities within the local
unit, the criterion “the most available person[s] rather
than the best person[s] for the job”—as stated by an
interviewee—is used for the selection of the project
leader and/or coordinator. The selection of less expe-
rienced project leaders or project coordinaters not only
hampers the cooperation during the project, but is
often the primary cause for a bad project start. Because
the appointed project manager often does not have
sufficient experience and knowledge about the com-
pany structure and its processes, some persons and
units may not be consulted. They have been “forgot-
ten”. Not because the project leader wants to ignore
them, but simply because s/he was not familiar enough
with the potentially relevant partners in the communi-
cation network of the MNC. This leads to a dysfunc-
tional climate. Adding to this problem, the follow-up
J PROD INNOV MANAG 373
2000;17:360 –377
and documentation systems in MNCs often do not
enable one to specificy and localize relevant parties
and persons.
No Involvement, No Commitment
Communication among team members during the
planning phase of an international innovation influ-
ences team integration. Skepticism about the ability to
influence the development process often prevails at the
sales and marketing subsidiaries. Often, these units are
convinced that a substantial information asymmetry
exists between the headquarter and its subsidiaries.
For reasons of information secrecy, local sales units
are often not involved in the innovation process until
much later, especially when they have not been as-
signed a ‘lead country’ role. Unfortunately, as was
evident in EuroTruck, such practices also lower the
motivation and willingness to support the new product
when it is launched in the market.
To avoid a lack of commitment, team members
from a central unit may want to consult key local
subsidiaries during the start of a new project. These
consultation processes may be of a very passive na-
ture, revealing as little as possible about the project.
Several of our respondents admitted that such commu-
nication is often ‘ceremonial’: the purpose is not to
acquire novel ideas, but to trigger acceptance.
External Communication Flows
Intense communication between a firm and its suppli-
ers reduces the product development cycle time and
improves product quality [16]. However, the interna-
tional externalization of new product development ac-
tivities greatly complicates the management of com-
munication flows. In innovation projects characterized
by a high level of externalization, the innovating firm
must succeed in minimizing communication costs and
information leaks, whereas creating a transparent com-
munication network, that allows for the transfer and
use of codified knowledge between members of dif-
ferent organizations.
The flexible use of rich, interpersonal communica-
tion channels is required for the effective exchange of
information between persons from different organiza-
tions. However, solely relying on informal mecha-
nisms will rarely suffice to deal adequately with an
enduring information flow in a complex network of
loosely coupled organizations. In practice, the team
and firm capabilities we have identified to manage
374 J PROD INNOV MANAG
2000;17:360 –377
communication flows within the new product devel-
opment team (e.g., the definition of a core team and
the appointment of a competent project leader), prove
to be useful for the management of ‘external’ commu-
nication flows.
Consider in this respect the HouseCare case study.
Because HouseCare had never cooperated intensively
with the selected external design company before,
both parties needed to get to know each other. For
instance, HouseCare product management did not dis-
cover until much later that the design company held a
completely different view about the notion ‘working
model’. HouseCare management outsourced the pro-
duction activities to a Chinese company, while their
Hong Kong subsidiary acted as a liaison. In order to
reduce traveling cost and time, face-to-face meetings
between House Care product management and the
Chinese manufacturer were kept to a strict minimum.
One month prior to the worldwide release of the prod-
uct to the national sales offices, the Chinese manufac-
turer discovered a major error in the technical speci-
fications developed by the design company. This
development project was later used in a HouseCare
workshop on quality management. An executive of the
Chinese manufacturer who participated in this work-
shop described it as “wonderful, but a little bit too
late”.
Conclusion
In the present study, we have analyzed the communi-
cation flows within the context of an international
innovation project. First, communication must be ef-
fective, that is, an information source must be able to
codify knowledge and to locate the relevant receivers
of information, who, in turn, must be receptive to this
information. Second, communication must also be ef-
ficient, that is, given the effectiveness requirements,
the cost of communication must be minimized and
information leaks must be avoided. In coping with
these communication requirements, a company may
employ multiple strategies. We distinguished four firm
capabilities (parallel structures, cross-functional and
interunit climate, communication infrastructure and
goal congruence) and four team capabilities (core
team, team leadership, team formalization, procedural
justice).
This article provides a parsimonious propositional
model on the communication requirements that must
be addressed in the management of communication
flows in international product innovation teams. This
R. K. MOENAERT ET AL.
nomological network was developed on the basis of an
exploratory in-depth study of four case studies and a
literature review. Although we have used a heterege-
nous sample, the propositions must be tested in a more
extensive sample. Thus, the present study needs a
quantitative falsification that will contribute empirical
evidence of a more conclusive nature.
Several important questions could be addressed in
future research. First, our research supports recent
evidence that effective communication is about more
than just uncertainty reduction [84]. In fact, commu-
nication (or the lack of it) also determines the attitudes
and behaviors of the parties involved. The existing
R&D literature explicitly focuses on the cognitive
effects of communication. Importantly, however, our
research shows that the affective and conative effects
are quite important. Decisions that are strongly em-
bedded in the network of the persons involved are
better supported. It is difficult to achieve commitment
without having established involvement. This study
shows that poor communication at the start not only
induces cognitive errors (i.e., limited uncertainty re-
duction) [85,113], but also affective errors (i.e., cre-
ation of a bad working climate).
Second, the data from the case studies shows that
the management of innovation programs is crucial, but
often ignored. An innovation program may be defined
as a coherent set of overlapping and/or sequential
projects in a specific product line. Although innova-
tion resources are allocated to discrete projects, a
sustainable competitive advantage is built through sev-
eral innovation projects [17,52,80,106]. A true pro-
gram orientation requires a dual strategy [1]: the effi-
cient and effective management of the present project
by leveraging already existing know-how within the
firm, and contributing to the success of future innova-
tion projects by advancing the existing know-how. In
our study, respondents indicated little attention to the
interfaces with other projects in the program portfolio.
Even if the company has formulated an innovation
program strategy (e.g., the use of technology road
maps at HouseCare), the resulting structure rarely
deals with it adequately (e.g., the absence of a program
coordinator, steering committee and product plat-
form). To a great extent, this is caused by the distance
between the various parties involved, and the limited
transparency of the international communication net-
work. Attention is focused on optimizing the local
agenda of activities rather than optimizing global op-
erations.
Third, international cooperation with external par-
INTERNATIONAL INNOVATION TEAMS
ties makes it more difficult for competitors to imitate
a firm’s product development capabilities [117].
Whereas the literature on network organizations sug-
gests that networking enables innovative enterprises to
learn about the markets, technologies, and competitors
[6,19,91,97], the analysis of the case studies shows
that firms consider cooperation mostly as an entry
ticket to markets and technologies. In only one com-
pany did several respondents mention that cooperation
was seen as a way to gain insight into the competitive
environment. Moreover, we see that the externaliza-
tion of subtasks is mostly decided on the basis of
operational issues (“the company working at the low-
est cost gets the offer”), rather than on the basis of
strategic considerations [98]. In summary: whereas
cooperation with external parties may be of great
strategic importance, it is seldom strategically
planned.
The authors gratefully acknowledge the financial support from the
Flemish Foundation for Scientific Research [research grant
G.0193.95], and thank FoodCorp, HouseCare, SteelTech and Eu-
roTruck for their participation in the present study. In addition, the
authors thank the Center for Business Economics and Strategic
Management of the Free University of Brussels for its support in
conducting this research project. Finally, the authors wish to thank
Timothy Devinney, two anonymous referees, Frank François, Ar-
noud De Meyer, Christophe Van den Bulte and Harry Comman-
deur for their helpful comments on earlier versions of this paper.
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