Technology outsourcing in manufacturing small- and medium-sized firms: Another competitive resource?

O'Regan, Nicholas; Kling, Gerhard

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. © 2010 The Authors. R&D Management © 2010 Blackwell Publishing Ltd.

• Journal Article Type: Article
• Publication Date: Jan 1, 2011
• Journal: R and D Management
• Print ISSN: 0033-6807
• Electronic ISSN: 1467-9310
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 41
• Issue: 1
• Pages: 92-105
• DOI: https://doi.org/10.1111/j.1467-9310.2010.00626.x
• Keywords: outsourcing, SMEs, technology, manufacturing, resources
• Public URL: https://uwe-repository.worktribe.com/output/966385
• Publisher URL: http://dx.doi.org/10.1111/j.1467-9310.2010.00626.x