R&D outsourcing as strategy in technology-based industrial organizations

Abstract

Innovation capacity has become a determinant factor of the sustainable competitive advantage of firms. The transversality of this process, however, has generated a debate about the externalization or internalization of this process. Some authors argue that externalization minimizes the costs for supervision and control of internal processes and increases R&D productivity, and, as a result, the innovation rate. Others claim that R&D internalization enables the management of internally developed knowledge that is idiosyncratic, non-imitable, non-substitutable, and rare to construct a firm’s competitive advantage. This is a contemporary and relevant subject, mainly to firms’ strategic positioning. This article is based on the results of a multiple-case study in three technology-based industrial organizations. The results showed that the decision of externalizing R&D or not is central to support the strategic positioning of these organizations.