Outsourcing Innovation: A Comparison of External Providers at Siemens

Abstract

Innovation outsourcing has become a widespread practice in R&D management. Five types of innovation partners are the most widely discussed: universities and R&D institutes, customers, suppliers, competitors, and high-technology start-up companies. Previous work has compared these innovation sources with respect to general strengths and weaknesses and main areas of use.

The current paper uses 24 case studies from Siemens practice to characterize specific operational management challenges and success drivers in outsourcing innovations from these five sources. We identify five success drivers that are common to all innovation sources and should be ensured by management whenever possible.

In addition, we find that each innovation source has several specific success drivers. Finally, the management challenges shift when a mature technology is sourced versus a novel, embryonic technology. Our results give managers guidance on how to adapt the operational management of an innovation outsourcing project to the source of the external knowledge and the technology maturity stage.

Keywords: Innovation providers, innovation outsourcing, success drivers

JEL Classification: O32