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How, and why, businesses innovate successfully overseas

Upon reading news reports last month that Chinese firms had recently acquired auto parts companies in Detroit, Annique Un’s mind began to bubble with questions. What made these American companies attractive? What new innovative strategies and practices will these Chinese companies bring to their new holdings? What knowledge and technology will they transfer back to China? How will this impact the dynamic in the auto industry capital of America?

Topics like these cut to the core of Un’s research and teaching as an associate professor of international business and strategy in the D’Amore-McKim School of Business. Her work focuses on innovation in international business; in particular, she’s interested in understanding how research and development and the management of employees influence innovation in both foreign and domestic firms.

“Innovation is an important topic for any organization. Many companies compete on this basis, whether the innovation is in products or processes,” Un said. “Any company that has operations outside its own country is constantly dealing with the issue of their ‘foreignness,’ which can be a source of advantage, a source of disadvantage, or both at the same time.” For a domestic company, Un said, understanding the unique advantages and disadvantages of its foreign competitors is critical to success.

Un is not afraid to challenge the traditional thinking of many international business strategists; she said factors that others believe are negatives for a company operating outside its home country may actually be positives. For instance, companies that enter a new international market aren’t tied to the social norms and traditions that domestic firms might feel obligated to uphold. In other words, foreign-owned firms can implement strategically important practices or policies and get away with them because they’re new in town. Un also said companies that are expanding their global footprint can take more chances than domestic firms in areas ranging from advertising to product design.

A 2011 article in Forbes highlighted her study of more than 750 foreign and domestic manufacturing firms operating in Spain. Backed by grants from the Spanish government, Un found that foreign-owned firms held the edge in innovation output. “If you’re an outsider, your way of thinking and doing things are not always constrained by the local social context,” said Un, who will present her findings in July at the Academy of International Business’s annual meeting in Turkey. “The conventional wisdom is to assimilate. But if you’ve proven you’re doing a better job, why would you want to be more like your competitors?”

Un’s interest in international business blossomed while studying in Japan as an undergraduate at the University of Notre Dame. After earning her master’s in business administration, she began working with Ford Motor Company in the early 1990s, when the U.S. and Japan were feuding over trade and the auto industry. “As a financial analyst,” she said, “I was fascinated by the differences between how auto companies in the two countries operated.”

Un earned her doctorate from the Sloan School of Management at the Massachusetts Institute of Technology. At Northeastern, she teaches an undergraduate course on international business and global social responsibility. “Our students are very worldly,” she said.

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