Building strategic partnerships for managing innovation outsourcing

Abstract

Purpose The purpose of this paper is to uncover the mechanisms of organizations managing innovation outsourcing to business partners. In a business environment characterized by the development of deep, niche expertise in a particular domain, business partnerships can provide a source of innovative rejuvenation by outsourcing the innovation to business partners who have complementary skills and expertise. This paper addresses a critical challenge which the organizations are currently facing: how do you manage outsourcing of innovation to business partners effectively while maintaining your strategic competitiveness? Design/methodology/approach Exploratory multiple case studies of over 30 innovative European and US companies were done. It involved 50 semi‐structured interviews with senior executives from research and development, product management, information technology, and marketing. Findings The paper identifies three complementary models of managing outsourcing of innovation to business partner: acquisition, strategic alliances, and open source (OS). Based on these, a three‐dimensional “Co‐Innovation Space” is proposed that can help in analysis and planning of current and future innovation projects. Research limitations/implications Although the research is carefully designed, it is an exploratory study and has the limitation of generalizability of the findings. Nevertheless, findings from multiple case studies from diverse organizations shed a light to current innovation and strategic alliance literature. Practical implications Partnerships can open the door to multiple knowledge sources. Accessing and integrating information from these sources can greatly enhance knowledge base of organizations and can help fuel sustainable innovation. The models proposed in this study provide a lens to examine existing innovation project portfolios and/or to plan for future innovation programmes. Originality/value This study is probably among few to study such a large, diversified, and geographically scattered group of organizations. Although exploratory and preliminary, this makes the findings of the study insightful.

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