Managing Open Innovation

Managing Open Innovation

Connecting the Firm to External Knowledge

André Spithoven, Peter Teirlinck and Dirk Frantzen

Open innovation is about firms’ external relations with other firms and organisations. It is a topic which has attracted an immense amount of attention, but which has also been heavily criticised due to the diversity of the ideas and fuzziness of its key concepts. To date, the bulk of the literature on open innovation draws on case study material to illustrate the operation of firms in an anecdotal way. By contrast, this book examines open innovation practices by using large-scale datasets and stresses their impact on firm performance. The authors examine four key issues: differences between firms in open innovation practices, public funding to enhance external relations, R & D outsourcing of firms, and the role of human resources in R & D and innovation.

Chapter 8: Managing R & D Outsourcing and the Impact on Firms’ R & D Employment

André Spithoven, Peter Teirlinck and Dirk Frantzen

Subjects: business and management, knowledge management, organisational innovation, economics and finance, economics of innovation, innovation and technology, economics of innovation, knowledge management, organisational innovation


8. Managing R&D outsourcing and the impact on firms’ R&D employment 8.1 INTRODUCTION Outsourcing activities are fuelling a heated debate among economists and the general public (Chesbrough, 2003a; Howells et al., 2008). Not that the purchase of goods and services from suppliers is anything new, but it is feared that the surge in outsourcing (off-shoring) displaces domestic employment. Due to the rising level of education among most of the populations of the developed world, the outsourcing of low-skilled labour has not yet set alarm bells ringing. However, with the increasing division of labour at firm level, the availability of specialist knowledge outside the firm’s walls, the need to remain competitive through innovation and the swift development of emerging economies such as India and China, it is believed that R&D outsourcing could potentially affect highly-skilled employees and displace R&D jobs. This chapter focuses on the impact on R&D employment intensity of firm-level decisions to start, increase, decrease or stop R&D outsourcing. This topic relates to the important move in strategic R&D management in the 1990s towards an increasing intensification of companies’ dependence on external sources of technology, including a trend towards more outsourcing (Coombs et al., 2003; Edler et al., 2002). Quinn and Hilmer (1995) attributed this tendency to the corporate strategies of firms to subcontract non-core or peripheral tasks. The higher reliance on external sources is considered part of a fundamental shift in the way companies generate new ideas and bring them to...

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