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R&D reputation and corporate brand value.

Article Excerpt
Corporate R&D is under pressure. Whereas innovative technology remains one of the most important business growth factors, it is difficult to link the outcomes of corporate R&D activities directly to a firm's market performance. Although new technologies mostly originate from R&D laboratories, their market success depends on multiple production, marketing, and sales-related factors that eclipse the research contribution.

Those corporate R&D centers that have survived have increasingly financed their resources through business-unit contracts and third-party funding (1). For instance, in the early 1990s, ABB's corporate research was 80 percent financed by corporate money while today about 70 percent comes from the business units. And Siemens is transforming large parts of its centralized Corporate Technology R&D department to in-house consulting, while IBM has established its industry solution labs to provide external clients with access to its research results, and thus gain research-related income for the corporation.

When the allocation of corporate money to R&D is reduced in favor of contract research assignments, the capability to attract the right resources--individuals and institutional partners--from an open-innovation ecosystem becomes a decisive success factor for technology companies. Moreover, a higher R&D intensity supports a stronger corporate brand, as can be seen from the analysis of 22 technology companies depicted in Figure 1.

Reputation management is an important factor in attracting partners and external funding. From interviews with CEOs and CTOs of nine large industrial and publicly-funded firms (2), we have a clear indication that a corporate R&D lab's well-managed reputation has a direct impact on the firm's brand value. In other words, corporate research labs should...

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