Question:
The impact of firm size on innovation has been debated for more than 50 years. Size is thought to confer advantages such as economies of scale in R&D, greater access to complementary resources (like capital and market access), and learning benefits. However, size may also be associated with disadvantages such as inertia and governance problems. Structural dimensions of the firm, including formalization, standardization, and centralization, also affect its propensity to innovate and its effectiveness at innovation. Firms need to understand the benefits of formalization and standardization as well as the structure of a centralized and decentralized work unit or team.
Respond to the following:
What are some advantages and disadvantages of having formalized procedures for improving the effectiveness or efficiency of innovation?
What factors should a firm consider when deciding how centralized its R&D activities should be?
Should firms employ a combination of centralized and decentralized activities? Under what circumstances might this be beneficial and why?