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How provider selection and management contribute to successful innovation outsourcing: an empirical study at Siemens

Author: Cui, Zhijian ; Loch, Christoph H. ; Grossmann, Bernd ; He, RuINSEAD Area: Technology and Operations Management Series: Working Paper ; 2010/56/TOM Publisher: Fontainebleau : INSEAD, 2010.Language: EnglishDescription: 39 p.Type of document: INSEAD Working Paper Online Access: Click here Abstract: It is becoming increasingly common to involve external technology providers in developing new technologies and new products. Two important phases in working with technology vendors are vendor selection and vendor management. For both steps, theory development of key decision guidelines is still immature. Therefore, we use detailed case studies of 31 innovation outsourcing projects at Siemens to develop grounded theory on provider selection criteria and on project management success drivers. A selection criterion commonly associated with successful outsourcing is the provider's "track record" of previous experience. Our cases suggest that there is no generic "success track record", but that a predictor of project success a match between the client firm's outsourcing motivation and the provider's strengths. A match appears to be a necessary condition for a successful outsourcing collaboration. As to the second phase of managing the vendor, we identify operational project success drivers. There seems to be no "universal list" of essential success drivers, but the most important drivers seem to be contingent on the type of vendor chosen and on the technology maturity: we compare five provider types, universities, competitors, customers, start-up companies and component suppliers. Some success drivers are common across providers, but others are relevant only for certain provider types; moreover, drivers for a mature technology are more focused on successful transfer into manufacturing than development itself. Our findings offer guidelines for innovation managers on how to select innovation providers and how to manage them during the project. Next title: How provider selection and management contribute to successful innovation outsourcing: an empirical study at Siemens (RV of 2010/56/TOM) by Cui, Zhijian, Loch, Christoph H., Grossmann, Bernd and He, Ru
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It is becoming increasingly common to involve external technology providers in developing new technologies and new products. Two important phases in working with technology vendors are vendor selection and vendor management. For both steps, theory development of key decision guidelines is still immature. Therefore, we use detailed case studies of 31 innovation outsourcing projects at Siemens to develop grounded theory on provider selection criteria and on project management success drivers. A selection criterion commonly associated with successful outsourcing is the provider's "track record" of previous experience. Our cases suggest that there is no generic "success track record", but that a predictor of project success a match between the client firm's outsourcing motivation and the provider's strengths. A match appears to be a necessary condition for a successful outsourcing collaboration. As to the second phase of managing the vendor, we identify operational project success drivers. There seems to be no "universal list" of essential success drivers, but the most important drivers seem to be contingent on the type of vendor chosen and on the technology maturity: we compare five provider types, universities, competitors, customers, start-up companies and component suppliers. Some success drivers are common across providers, but others are relevant only for certain provider types; moreover, drivers for a mature technology are more focused on successful transfer into manufacturing than development itself. Our findings offer guidelines for innovation managers on how to select innovation providers and how to manage them during the project.

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