External technology sourcing: evidence from design‐driven innovation

Abstract

PurposeThe purpose of the paper is to analyse the changing of governance modes for the acquisition of external technology in the context of design driven innovation.Design/methodology/approachThis is an explorative study drawing on cases of new product development (NPD) by six design‐oriented Italian firms. In analyzing the cases a longitudinal approach is taken.FindingsThe analysis of the cases shows a similar pattern for technology sourcing during the NPD process, starting with informal networks and ending with hierarchical structures. In the early stages of NPD, when market uncertainty and technological uncertainty are very high, these companies choose an informal network. However, once the product concept is defined and the companies need to become familiar with a technology, they move to strategic alliances with partners. In the final stages of NPD, more hierarchical structures seem to prevail.Research limitations/implicationsThere are two main limitations of the study. The paper investigates the influence of uncertainty on the choice of governance modes and does not consider other variables that could impact on choice such as assets specificity, frequency of transactions, product complexity, cultural distance among partners, etc. Another limitation of the study is the small set of cases.Practical implicationsFrom a managerial point of view, this study suggests that firms which develop successful design‐driven innovations follow an organizational pattern for technology sourcing during the NPD process, starting with informal networks and ending with hierarchical structures. Thus it is extremely important for these firms to have an open‐minded management that fosters the creation of a wide external network. This openness shown by the firms towards collaboration with other organizations in order to acquire ideas, new materials and knowledge must be offset by the secure protection of the results of the innovation process. Managers must foresee these needs and find ways to safeguard the results obtained through experimentation by means of patents or exclusive contracts with the supplier.Originality/valueThe paper contributes to the research on the theme of design‐driven innovation, analyzing the evolution and change in governance modes across the new product development process. It thus differentiates from the existing literature adopting a dynamic view, where multiple transactions are taken into consideration.

The uncertainty of innovation: a systematic review of the literature

“…Technology causes uncertainty in respect of the skills and knowledge required to succeed in using new technology (e.g. Veryzer 1998;Nieto 2004;Ortt & Smits 2006;Carbonell & Rodrı´guez-Escudero 2009;Cantarello et al 2011). Ortt and Smits (2006) have eloquently stated that "technology does not offer itself as ready-made packages, but more as opportunities".…”

“…With interaction the social and political aspects of innovation become visible. Cooperation between, and the risk of opportunism on behalf of, the partners involved in innovation increases uncertainty (Cantarello et al 2011). For Arias (1995), Sartorius (2006) and Ortt & Smits (2006), the result is the 'fundamental uncertainty' that arises from the wide variety and high complexity of interactions between different actors with their own interests.…”

“…Gibbons & Littler (1979), Gales & Mansour-Cole (1995) and Cantarello et al (2011) have found that uncertainty may persist or even increase as innovation projects progress. Gales and Mansour-Cole (1995) argue that while uncertainty may be high in the early phases of an innovation project, uncertainty is unproblematic by nature.…”

Enabling Innovation in Complex Welfare Service Systems

“…Souder and Moenaert [50] have offered a little more accurate categorization and have indentified four sources of innovation uncertainty: consumer, technological, competetive and resource uncertainty. Cantarello et al [51], in turn, have stressed behavioral uncertainty around innovation. Furthermore, Macdonald and Jianling [52] and Halbesleben et al [53], among others, have identified the timing of innovation as a source of uncertainty.…”

Information systems offshore outsourcing: managerial conclusions from academic research

“…Nevertheless, following the example of previous works written by other authors (Hirschheim 2006;Holmström Olsson et al 2008;Kelly and Noonan 2008), both terms will be used indifferently and interchangeably throughout this paper. IS Offshore Outsourcing raises problems similar to those associated with outsourcing inside the same country; it shares the same motivations or reasons which make it attractive and similar risks or potential problems (Cantarello et al 2011). However, the geographical as well as cultural distance which often exists between clients and providers of these services leads to the emergence of several risks which are specific to Offshore Outsourcing, such as those derived from having to battle with various time zones, different legislations or additional security and privacy problems.…”