Week8_Forman and Zeebroeck (2012)_Yaeeun Kim

The authors examined the basic Internet adoption for reducing the coordination costs of geographically dispersed firm teams. They hypothesized that adoption of basic Internet will be associated with an increase in the likelihood of collaboration for multi-inventor, geographically dispersed teams (hypothesis 1); Adoption of basic Internet will be associated with a smaller increase in the likelihood of collaboration for single-location multi-inventor teams than for geographically dispersed teams (hypothesis 2); and Adoption of basic Internet will be associated with a smaller increase in the likelihood of collaboration for single inventors than for geographically dispersed teams (hypothesis 3).

For analysis, they used fixed effects panel data model. Their findings suggest that there is no evidence of a link between Internet adoption and within-location collaborative patents. There is no evidence of a relationship between basic Internet and single-inventor patents. These evidences show that basic Internet adoption lowered the coordination costs of geographically dispersed research teams. This does not have to be interpreted as easier access to electronic knowledge systems or shared resources rendered an increase in research output of those who adopted basic Internet. .

The result suggests that IT can be used to integrate geographically dispersed operations, either obtained through acquisition or deliberately dispersed. The limitation of the study oriented from the sample data is one sample size and one period of time within U.S. When they design their international R&D organization, firms mostly regard the following options: a centralized organization that provides higher control and decentralized structure that enables local knowledge resources but increasing coordination cost. However, the study result supports that IT investments may substantially alter the trade-off and decentralized model more attractive, which encourages a more distant R&D activities within firms.