Until more recently, many multinationals took the decision to centralize their global R&D for three main various reasons:

1. The need to control the development of new technologies on which the firms future competitiveness might rest.
2. The is economy of scale in R&D where very large amounts of resources can be concentrated into single centres with no duplication of efforts
3. There was the fear that foreign research departments might be a source of leakage of ideas and knowledge.

Changes in the global environment and the carving up of world markets into three leading global centers (America, Asia Pacific, Europe) resulting in ‘centres of excellence’ in research in particular industries , has changed the thinking of technology manages in many multinationals. It is now becoming common that R&D functions are being decentralized in the strategies of global firms as an attempt to derive maximum advantages of the organizations global presence. There are various types of R&D organizational development:

1. Centre for global: this approach is typically followed by multinational firms as explained earlier. While there are advantages in term of control and scale economies, the risk of being insensitive to local market demands in the world leading markets.
2. Local for local: This approach suggests research in all target markets in order that the technologies which are developed match with local market demands. This is beneficial in terms of local adaptation, but the approach including duplication and a tendency for subsidiaries to ‘reinvent the wheel’ in an attempt to maintain the local autonomy
3. Locally leveraged: Under this approach the manager introduce the most creative and innovative developments from various subsidiaries to other subsidiaries worldwide. The disadvantage here is the fact that there is normally frequent impediments to transferring products from one market to another, such as cultural difference and local market demand conditions.
4. Globally linked: this involves establishing flexible linkages between research teams in various global centres. This allows the organization to explore synergies and at the same time exploit local leverage advantages. The downside to this approach is the cost of coordination and the complexity of managing the linkage on a continuous basis.

Each of the approaches have their advantage and disadvantages, this may mean that managers may have to improvise to capitalize on the advantages of each. The firm can choose to have major centres for R&D in a number of key global locations, with a series of local R&D support offices acting as idea generating centres, instead of capital intensive research laboratories.