Choosing between internal and non-internal R&D activities: some technological and economic factors

Rajneesh Narula

No 22, Research Memorandum from Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT)

Abstract: This paper evaluates some of the technological and economic factors that underlie the choice between in-house R&D, R&D alliances and outsourcing. We recount the reasons for the growth in non-internal activities, and explain why these are not as prevalent for R&D as other value-adding activities, and highlight that outsourcing is most often undertaken where multiple, substitutable sources are available. We then develop two frameworks. First, a static framework is developed, which evaluates the choice of mode based on a firm''s distribution of competencies, and their strategic importance. Second, a dynamic framework is developed that demonstrates how the static framework differs depending on whether the firm is engaged in pre-paradigmatic, paradigmatic or post-paradigmatic sectors. We also consider the effect of new technologies being introduced to a firm''s portfolio of competencies.

Keywords: industrial organization (search for similar items in EconPapers)
Date: 1999
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Citations: View citations in EconPapers (8)

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