Technology outsourcing in manufacturing small‐ and medium‐sized firms: another competitive resource?

Abstract

Based on a sample of UK manufacturing small‐ and medium‐sized firms in the engineering and electronics industry, the study identifies firm‐ and industry‐specific factors that stimulate R&D outsourcing and assesses the impact of R&D investment and outsourcing on firms' profitability. The findings indicate that (1) R&D investment fosters profitability, (2) firms with a lower turnover spend less on R&D, (3) current R&D does not explain innovation measured by revenues from new products and patents, (4) smaller firms with lower R&D investment levels tend to outsource R&D and (5) outsourcing is not inferior in terms of product innovation. Hence, outsourcing can enhance profitability – albeit the benefit of outsourcing decreases with firm size. Managers of small firms should consider outsourcing R&D, as this can reduce R&D expenditure and lead to the more effective use of resources as well as achieving a similar degree of product innovation with resultant increases in profitability.

Small and Medium Enterprises collaborations with knowledge intensive services: an explorative analysis of the impact of innovation vouchers

“…Link and Rees, ; Acs et al, ). This may be related to the fact that SMEs are not able to cover the spectrum of technology required for their innovation, or their innovation may be so discontinuous that it cannot justify internal R&D activities (O'Regan and Kling, ).…”

Networking innovation in the European car industry: Does the Open Innovation model fit?

“…Vermeulen, 2005, Keupp and Gassmann, 2007, O'Regan and Kling, 2011. However, our analysis suggests that SMEs in the car industry are slow to engage in networks and OI practices due to appropriability concerns and resource limitations.…”

“…One way to overcome these deficiencies is through engaging in interorganisational networks, which reinforce SMEs' innovative ability by providing them with a window on technological and market change, and sources of technical assistance and potentially available resource flows (Vermeulen, 2005, O'Regan andKling, 2011). However, existing research is inconclusive about the ability of SMEs to engage in networks and exploit effectively external scientific and technical knowledge to support their innovation.…”

Electronic companies with high growth potential: Financial position to future challenges

“…Para finalizar la literatura cabe tener presente que en las pymes de ingeniería e industria electrónica en Reino Unido se observa que la I+D fomenta la rentabilidad aunque se externalice, y el indicador de I+D se complementa con patentes para precisar mejor la innovación de la pyme (O'Regan & Kling, 2011). De otra parte, O'Regan y Kling consideran que en las pymes de ingeniería y electrónica la externalización es decisiva para conseguir la deseada competitividad que redunda en mayores rendimientos.…”