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Outsourcing of New Product Development - A decision framework
Halmstad University, School of Business and Engineering (SET), Centre for Innovation, Entrepreneurship and Learning Research (CIEL).ORCID iD: 0000-0002-8603-9269
2007 (English)Licentiate thesis, comprehensive summary (Other academic)
Abstract [en]

The focus of this thesis is the outsourcing of activities in the New Product Development (NPD) process. Outsourcing of NPD refers to the outsourcing of development activities for the developing of new products (goods and/or service), where all or just the innovative part of the NPD process is purchased externally based on a contract with organizational units separate from the outsourcing firm. This definition implies that (A) the activity should be an innovative part of the NPD process, (B) the activity should have previously been conducted internally, and (C) the activity should be purchased under a contractual agreement between the organizations.

This thesis focuses on the outsourcing of NPD in medium sized firms. Although the framework is probably also useful for small and large firms, the three empirical studies in the thesis explored samples of medium sized firms. NPD is a knowledge intensive activity that requires the ability to handle uncertainties and is very dependent on the individuals involved in the process. In this way it differs from production, which (especially when producing standard items on a large scale) is easier to control, monitor and to evaluate the costs. Therefore, some considerations connected to knowledge acquisition and uncertainty needs to be addressed.

A literature review reveals that research on outsourcing often focuses on A) Large firms and B) outsourcing of production activities. In addition, research on NPD usually involves large firms, despite the fact that the interest in product development in small and medium sized firms has grown rapidly in recent years. Since outsourcing of NPD is a method frequently used to access competence, and reduce costs and/or uncertainty, it seems motivated to study the outsourcing of NPD in medium sized firms.

The thesis presents a decision framework that is based on three empirical studies (two survey studies and one case study) and a theoretical framework. The theoretical framework presented in the thesis is commonly used to understand outsourcing questions in general. In the present thesis the framework is applied in the specific situation of outsourcing a knowledge intensive activity (such as NPD) in the context of medium sized firms. Transactions cost, resource based, resource dependency, knowledge based, agency cost, and institutional theories are revisited in the thesis.

Outsourcing can lead to advantages in form of lower costs, access to knowledge or other resources, as well as access to markets, but it can also result in a knowledge drain, lower motivation among in-house staff, or an increased level of dependency on external organizations. Therefore the decision to outsource is not always a good one, and the pros and cons must be carefully evaluated. The result of the thesis is a decision framework that maps factors affecting the decisions that need to be made when outsourcing NPD. The implications can be of value to the outsourcing firm as well as to the potential outsourcing partner. The framework has been presented to the firms in the studies and thus has already proved its value to some extent.

The framework will also be used for the design of the studies that will hopefully take me towards my PhD degree, including a new survey study as well as a case study focusing on knowledge integration.

Place, publisher, year, edition, pages
Luleå: Luleå University of Technology , 2007. , p. 72
Series
Licentiate thesis, ISSN 1402-1757 ; LTU-LIC--07/50--SE
Keywords [en]
Outsourcing, NPD, Outsourcing of NPD, Outsourcing decision
National Category
Social Sciences
Identifiers
URN: urn:nbn:se:hh:diva-1012Local ID: 2082/1373OAI: oai:DiVA.org:hh-1012DiVA, id: diva2:238230
Presentation
(English)
Available from: 2007-11-06 Created: 2007-11-06 Last updated: 2013-03-13Bibliographically approved
List of papers
1. The use of processes and methods in NPD: A survey of Swedish industry
Open this publication in new window or tab >>The use of processes and methods in NPD: A survey of Swedish industry
2004 (English)In: International Journal of Innovation and Technology Management (IJITM), ISSN 0219-8770, Vol. 1, no 1, p. 37-54Article in journal (Refereed) Published
Abstract [en]

Research often suggests that formal New Product Development (NPD) processes increase the success rate of NPD projects in a firm. However, recent studies indicate a relatively low usage of formal NPD-processes. Very few studies of NPD practices have been carried out in contexts other than that of the US, thus it is of interest to explore whether or not important differences exist. The present study aims to identify the use of and practices within formal NPD-processes in Swedish manufacturing firms and to compare the results with a study conducted in a US context. The results indicate that differences exist in for example reward systems for NPD teams.

Place, publisher, year, edition, pages
Singapore: World Scientific Publishing Company, 2004
Keywords
NPD-process, Survey study, Best practice
National Category
Social Sciences
Identifiers
urn:nbn:se:hh:diva-278 (URN)10.1142/S0219877004000076 (DOI)2-s2.0-33749504673 (Scopus ID)2082/574 (Local ID)2082/574 (Archive number)2082/574 (OAI)
Available from: 2006-11-27 Created: 2006-11-27 Last updated: 2018-03-23Bibliographically approved
2. World-class or Good Enough: The Choice of Partner when Outsourcing New Product Development in Medium-Sized Firms
Open this publication in new window or tab >>World-class or Good Enough: The Choice of Partner when Outsourcing New Product Development in Medium-Sized Firms
2008 (English)In: International Journal of Innovation and Technology Management (IJITM), ISSN 0219-8770, Vol. 5, no 4, p. 423-445Article in journal (Refereed) Published
Abstract [en]

Research on outsourcing normally focuses on outsourcing of production and often uses large firms as samples. Only a few studies address the outsourcing of services or knowledge-intensive activities such as new product development (NPD), and especially in the context of medium-sized firms. Our earlier research in medium-sized firms indicates that outsourcing of NPD is frequent in medium-sized firms, and that there is a lack of knowledge about the phenomenon. This article offers a theoretical framework to study the outsourcing of NPD, and includes the results from a longitudinal case study carried out in six Swedish medium-sized firms to help understand the rationales behind outsourcing of NPD. Results from the present study indicate that ‘good enough’ is the keyword for medium-sized firms with limited resources. This means that it is considered more important with proximity and trust than world class competence, since close and frequent contacts are crucial, when outsourcing knowledge-intensive activities such as NPD. A conceptual model and a definition of the good enough concept are also presented.

Place, publisher, year, edition, pages
Singapore: World Scientific, 2008
Keywords
Outsourcing, external sourcing, new product development, medium-sized firms, SME
National Category
Other Mechanical Engineering
Identifiers
urn:nbn:se:hh:diva-2401 (URN)10.1142/S0219877008001448 (DOI)2-s2.0-74349115168 (Scopus ID)2082/2803 (Local ID)2082/2803 (Archive number)2082/2803 (OAI)
Available from: 2009-03-18 Created: 2009-03-18 Last updated: 2018-02-22Bibliographically approved
3. Product Development in SMEs: A literature review
Open this publication in new window or tab >>Product Development in SMEs: A literature review
Show others...
2008 (English)In: International Journal of Technology Intelligence and Planning (IJTIP), ISSN 1740-2832, E-ISSN 1740-2840, E-ISSN 1740-2840, Vol. 4, no 3, p. 299-325Article in journal (Refereed) Published
Abstract [en]

Product Development (PD) in Small and medium-sized Firms (SMEs) is a long-neglected research area, and little cumulative work has been conducted previously. The purpose of this paper is to provide a first overview of the area of PD in SMEs. In doing so, we draw upon a sample of 149 peer-reviewed research papers selected from an initial sample of 5694 papers. The review provides tentative answers to issues such as the analytical and methodological approaches of the papers, which topics or areas of research have been focused on by previous scholars, and what kinds of topics that are well covered.

Place, publisher, year, edition, pages
Olney: InderScience Publishers, 2008
National Category
Other Mechanical Engineering
Identifiers
urn:nbn:se:hh:diva-2417 (URN)10.1504/IJTIP.2008.020099 (DOI)2-s2.0-50849111399 (Scopus ID)2082/2819 (Local ID)2082/2819 (Archive number)2082/2819 (OAI)
Available from: 2009-03-23 Created: 2009-03-23 Last updated: 2018-03-23Bibliographically approved
4. Outsourcing and organizing of NPD: A Survey of Malaysian industry
Open this publication in new window or tab >>Outsourcing and organizing of NPD: A Survey of Malaysian industry
2007 (English)In: Proceedings from EIASM 14th IPDMC, European Institute for Advanced Studies in Management (EIASM) , 2007, p. 12-Conference paper, Published paper (Other (popular science, discussion, etc.))
Abstract [en]

Malaysian manufacturing firms are interested in New Product Development (NPD) methods, due to the fact that they are competitive tools for survival. The purpose of the present study is to investigate NPD practices in Malaysia, in particular the outsourcing of NPD and the organizing of NPD. We achieved our objectives by conducting a survey of 72 companies in the automotive, chemical, and electrical industries and analyzing the results. Managers involved in NPD will benefit from the findings presented in this paper. The results indicate that the NPD practices used in Malaysian firms focus more on production cost and manufacturability, whereas the need for increased knowledge receives lower priority.

Place, publisher, year, edition, pages
European Institute for Advanced Studies in Management (EIASM), 2007
Keywords
Outsourcing, NPD, Malaysia, Outsourcing of NPD
National Category
Economics and Business
Identifiers
urn:nbn:se:hh:diva-1011 (URN)2082/1372 (Local ID)2082/1372 (Archive number)2082/1372 (OAI)
Conference
14TH INTERNATIONAL PRODUCT DEVELOPMENT MANAGEMENT CONFERENCE
Available from: 2007-11-06 Created: 2007-11-06 Last updated: 2012-09-21Bibliographically approved

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