How Provider Selection and Management Contribute to Successful Innovation Outsourcing

Abstract

We use detailed case studies of 31 innovation outsourcing projects at Siemens to develop grounded theory on (1) selection criteria for external technology providers, and (2) operational project management success factors in the collaboration with providers. We compare five types of providers: universities, competitors, customers, start-up companies and component suppliers.

A selection criterion commonly associated with successful outsourcing is the provider’s "track record" in so far as there needs to be a match between the client firm’s outsourcing motivation and the provider’s strengths. Six previously observed outsourcing motivations (cost, market, technology, production, strategic, and organizational) appear in our sample. A match appears to be a necessary condition for a successful outsourcing collaboration. We also identify operational project success drivers for the management of technology outsourcing. Some drivers are common across providers and some are provider-specific. Our two findings offer guidelines for innovation managers on how to select innovation providers and how to manage them during the project.

Keywords: Innovation Outsourcing, Collaborative R&D, Categorical Data, Field Research, Contingency Analysis