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Influence of the Transition Process on the Organization of the Research and Development Units in the Large Croatian Enterprises

The transition process, that started in 1990 in Croatia, got its new features in the last couple of years when it became directed to the transition of the Croatian economy, primarly through the privatization and re-structuring process. While the privatization process of the banks and public enterprises enters the final phase - ownership re-structuring, the economic re-structuring process of large Croatian enterprises is in its most delicate phase. The re-structuring process is focused both on the changing of the economic structure and organization structure of large Croatian enterprises. The focus of this essay is precisely organization re-structuring the re-design process of the organization structure of large Croatian enterprises that includes systematic re-shaping of all business functions of an enterprise and especially the research and development function as one of the basic organizational functions. 1. The purpose of the study - basic research hypothesis Special empirical research involving 90 out of 169 of the largest Croatian enterprises was conducted to fully perceive the influence of the transition process on the mentioned function, or, in other words, organization and the number of research-development units within large Croatian enterprises. Given the goal of the research was, reinforced with the use of field research and data collected by questionnaire, to find out what is the organization level of research and development functions and research-development units in selected large Croatian enterprises, which would be a starting point that would help to suggest the directions and methods to re-design its function and corresponding units within the global re-structure and re-design of large Croatian enterprises. The starting point of the research was the supposition that, in the period from 1990 to the middle of 1998 (when this research was conducted), under the influence of the transition movements, significant changes in the economic structure of Croatia took place, both in the organizational structure of the large enterprises as well as in the organization of the research-development activities in large Croatian enterprises. This essay is based on the several key hypotheses: Hypothesis 1 - under the influence of the privatization process, including ownership re-structuring and the small enterpreneurship development trend, the number of large Croatian enterprises is constantly decreasing. Hypothesis 2 - reduction in the number of large Croatian enterprises, within which a certain segment of the research-development activity was developed, leads to the decrease in the number and change in the position and role of the research-development units within large Croatian enterprises. Hypothesis 3 - under the influence of the transition processes, and within the re-structure of the large Croatian enterprises, the way that research-development units within them are organized is significantly altered. 2. Research results 2.1 Role and number of large enterprises in Croatia In the period from 1990 to present time, we can separate three periods in the existence of large Croatian enterprises from the aspect of their number. First, in the period from the beginning of 1990 to April 1991 there were 2,000 large enterprises in the Croatian economy (according to the criteria of 500 or more employees). In the second period, from April 1991 to the end of 1995, the number of large Croatian enterprises radically decreased and their number at the end of 1995 was 587 in total. In the third period, from 1995 up till today, the trend of decrease continued so that today, according to the latest estimate, there are 169 large enterprises which proves the first hypothesis. The mentioned trend of decrease usually follows the same or similar trends of developed West-European countries as well as Middle-European countries in transition since large enterprises lose in their size, but they manage to maintain a leading market position in their line of work by efficient changes of their economic and organization structure. 2.2. Role of research and development and the number of research-development units in the structure of large Croatian enterprises In the organization structure of large enterprises and, therefore, in the organization structure of large Croatian enterprises as well, the research and development function has a very important role. Its role and significance are quite different in different enterprises which reflect on the existence of different organizational units for research and development in large Croatian enterprises. Size and range research-development units, which work in large Croatian enterprises, are usually connected to the immediate production process or new product development, with the dominance of applied and developed research. Conducted researches, on the sample of 90 large Croatian enterprises, confirmed the second hypothesis which says that, as a result of the decrease in the number of large Croatian enterprises, came a change in the number and role and the position of research-development units within large Croatian enterprises. Research results showed that research-development activity is organized in the best way in the following large Croatian enterprises: INA - industrija nafte d.d., Pliva d.d., Končar-Elektroindustrija d.d., Ericcson Nikola Tesla d.d. and Podravka-prehrambena industrija d.d. From the global research and development organization in the mentioned large Croatian enterprises, research institutes are very active. We should also mention the appearance of the first technical-business and innovative centers. Contrary to the institute strengthening trends (example of Pliva d.d) and technological parks and innovative centers establishment (example of Končar-Elektroindustrija d.d.), there are trends of disappearance of certain institutes. Analysis of the questionnaires showed that, in the practice of most large Croatian enterprises, sectors, services and departments are dominant forms nowadays. 3. Conclusive discussion Results of the research confirmed all three hypotheses. According to the first hypothesis, under the influence of positive (privatization, re-structure, democratization, small entrepreneurship development) and negative (unfavorable economic trends and irregularities in the privatization procedures) privatization processes, the number of Croatian enterprises is constantly decreasing. We have to emphasize that the mentioned trend accompanies similar trends in the developed countries and it should not be a negative one. On the contrary, with the decrease in size, these enterprises become more efficient, flexible and competitive. This way, they remain to be the most successful in their branch, keeping the role of the leader in the realization and encouragement of the research-development activities. The second hypothesis had a goal of proving the connection between the decrease in the number of large enterprises and the decrease in the number and change in the position and role of research-development units within them. Research results confirmed this hypothesis as well. Under the influence of transition processes, and especially under the influence of negative economic movements (decrease of production output, loss of market, not being able to comply financial obligations) that resulted in the closing of individual “non-productive” departments and letting go of a major number of employees, certain headquarters services were closed. First were the research-development units. Many of them were annulled and their employees left the enterprise or moved to other services. Analyzing the data from the questionnaire, we can notice that currently in the organizational structure of large enterprises, when it comes to the organization of research and development, sectors, services and departments are dominant, with the existence of certain more complex forms and the appliance of new organizational concepts. The third hypothesis proved that, according to the changes both in the number of large enterprises and in the number of research-development units within them, changes in the organization of research-development units must happen as well. An example from the practice of polled enterprises confirms that changes in the organization of research-development units did happen, but they are still not enough. This calls for new models of global organization and more efficient forms of interior organization of research and development with the appliance of the concept of strategic management of this function. We can anticipate that this will include the abandoning of earlier organization solutions and the conceptualization of the new ones which would be based, according to the author’s opinion, on the following approaches: outsourcing, technical park as the form of outsourcing, research-development institutions as the core of outsourcing, research incubators or learning laboratories, full quality introduction, implementation of the ISO 9000 standard and strategic management through research and development. SELECTED BIBLIOGRAPHY: Dulčić, Ž., (1993): Organizacijska struktura poduzeća u uvjetima ambijentalne kompleksnosti i dinamičnosti, (Ph. D. dissertation), Faculty of Economics Split, Split, pp. 71-76 Dulčić, Ž., et al., (1996): Proizvodni management, Faculty of Economics Split and FESB - Split, Split, pp. 57-62 Martin, J., (1995): The Great Transition Using the Seven Disciplines of Enterprise Engineering to Align People, Technology and Strategy, AMACOM - American Management Association, New York, pp. 148-152 Leonard-Barton, D., (1992): The Factory as a Learning laboratory, Sloan management review, Fall Ellis, L., (1997): Evaluation of R&D Processes: Effectiveness Through Measurements, Artech House, London McLaughlin, C. G., (1995): Total Quality in Research and Development, St.Lucie Press, Delray Beach, Florida

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