R&D Outsourcing in Information Technology Organisations: Effects on Costs, Profits, and Technological Capability

Huang, Y.; Chung, H.; Lin, Chad

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Authors

Huang, Y.

Chung, H.

Lin, Chad

Date

2005

Type

Conference Paper

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Citation

Huang, Y. and Chung, H. and Lin, C. 2005. R&D Outsourcing in Information Technology Organisations: Effects on Costs, Profits, and Technological Capability, in Khalid S. Soliman (ed), Proceedings of The 2005 International Business Information Management Conference (IBIMA 2005), Jul 5 2005, pp. 398-405. Lisbon, Portugal: International Business Information Management Association (IBIMA).

Source Title

Information Management in Modern Enterprise: Issues & Solutions

Source Conference

Proceedings of The 2005 International Business Information Management Conference (IBIMA 2005)

Abstract

Because of the budgetary constraints, an increasing number of organizations have taken the decision to outsource their R&D activities to external outsourcing contractors. However, relevant literature continues to debate on whether or not R&D outsourcing can improve organizations’ financial performance. Therefore, this study aims to study how different sourcing strategies during new product development process influence development cost, financial profit and technological capability. The results from 121 Taiwanese IT firms indicate that R&D outsourcing is more effective in terms of both financial benefits and technological capabilities gained when products are developed under radical product innovation. The results also indicate that R&D outsourcing should be treated as complementary to in-house R&D. Research and managerial implications are also discussed.