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Exploring the role of value in the technology sourcing decision
by C. Helen Takacs, Alok K. Chakrabarti
International Journal of Strategic Change Management (IJSCM), Vol. 1, No. 4, 2009

 

Abstract: New product development often incorporates a multitude of individual technologies. Research and experience show that even very large firms have resource limitations that prevent them from maintaining and developing all of the necessary technologies in-house. We explore how the value of a technology is related to whether a firm develops a technology internally or sources it through some external means. This research is set in the medical devices industry, and our model linking value to technology sourcing is based on both previous literature and on exploratory interviews conducted in Finland and the USA. We test the model with survey data gathered from US firms on 162 individual technologies. The results indicate that the relationship between value and internal sourcing is strongest when value is defined operationally (reduces costs) than when it is defined strategically (increases differentiation). Additionally, the uniqueness of a technology is antecedent to its value.

 

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