The R&D outsourcing decision: Environmental factors and strategic considerations

We develop a framework for understanding the direct and indirect influence of various strategic considerations and environmental factors on the project-level R&D outsourcing decision. We argue that environmental factors can act as shift parameters that increase or decrease the costs of outsourcing. We further posit that it is important to consider firm-level strategic considerations in addition to the project- and transaction-level characteristics that are typically the focus of an R&D outsourcing decision, which highlights the importance of integrating the information possessed by managers from different levels of the organization. Finally, we discuss several directions for future research in this increasingly important area of innovation and technology management.