How Provider Selection and Management Contribute to Successful Innovation Outsourcing: An Empirical Study at Siemens

40 Pages Posted: 17 Aug 2010 Last revised: 11 Nov 2010

See all articles by Zhijian Cui

Zhijian Cui

IE Business School, Operations and Technology Management

Christoph H. Loch

INSEAD - Technology and Operations Management

Bernd Grossmann

Siemens

Ru He

Siemens AG - Munich

Date Written: November 9, 2010

Abstract

It is becoming increasingly common to involve external technology providers in developing new technologies and new products. Two important phases involved in working with technology vendors are vendor selection and vendor management. Since for both steps theory development of key decision guidelines is still immature, we use detailed case studies of 31 innovation outsourcing projects at Siemens to develop grounded theory on provider selection criteria and on project management success drivers. A selection criterion often associated with successful outsourcing is the provider’s “track record” or previous experience. Our cases suggest that there is no standard “track record” for success but that a “match” between the client firm’s outsourcing motivation and the provider’s strengths appears to be a necessary condition for a successful outsourcing collaboration. As to the second phase – managing the vendor – we identify a number of operational project success drivers. There seems to be no universal checklist, but the most important drivers seem to be contingent on the type of vendor chosen and on the maturity of the technology. We compare five provider types – universities, competitors, customers, start-up companies and component suppliers – and find that some success drivers are common to all providers, while others are relevant only for certain types of provider. Moreover, drivers in the case of a mature technology are more focused on successful transfer to manufacturing than on development itself. Our 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

Suggested Citation

Cui, Zhijian and Loch, Christoph H. and Grossmann, Bernd and He, Ru, How Provider Selection and Management Contribute to Successful Innovation Outsourcing: An Empirical Study at Siemens (November 9, 2010). INSEAD Working Paper No. 2010/96/TOM, Available at SSRN: https://ssrn.com/abstract=1659773 or http://dx.doi.org/10.2139/ssrn.1659773

Zhijian Cui (Contact Author)

IE Business School, Operations and Technology Management ( email )

Finance Department
Castellon de la Plana, 8
Madrid, 28006
Spain

Christoph H. Loch

INSEAD - Technology and Operations Management ( email )

Boulevard de Constance
77305 Fontainebleau
France
+33 1 6072 4477 (Phone)
+33 1 6074 6716 (Fax)

HOME PAGE: www.insead.edu/~loch/fullcv.htm

Bernd Grossmann

Siemens ( email )

Wittelsbacher Platz 2
München, 80333
Germany

Ru He

Siemens AG - Munich ( email )

Wittelsbacher Platz 2
München, 80333
Germany

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