Connecting the Firm to External Knowledge
Chapter 8: Managing R & D Outsourcing and the Impact on Firms’ R & D Employment
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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