Corporate Innovation and the Organizational Structure of Development

Abstract

Prior studies exploring the relationship between organization of corporate R&D and innovation have focused almost entirely on research activities. We examine the relationship between organizational structure of development activities and innovation outcomes. We hypothesize that organizational structure has an impact on development that is distinct from that on research. Specifically, centralization of development is associated with reduced duplication of development effort; however, the likelihood that a given invention will be commercialized is lower for centralized development than decentralized development. We test these hypotheses using a unique dataset that is composed of all invention disclosures submitted by R&D personnel at a global information-communications-technology company. Exploiting a shift in the organization of development activities, we examine subsequent changes in development outcomes. We find support for our hypotheses.