External technology sourcing and the dark side of open innovation

Abstract

Firms in high-technology industries face a complex set of challenges to innovate successfully and continuously, to gain a sustainable competitive advantage. At the top of this list of challenges lies the choice firms must make regarding project sourcing in their pursuit of innovation. This research makes a significant and novel contribution to this discourse and examines the sourcing decision in the context of new product development. Specifically, we apply a project-level typology along the dimensions of new R&D project source and project familiarity. Drawing from transaction cost economics and knowledge-based view theories, we empirically test our theoretically-developed hypotheses on a dataset of 2,971 biopharmaceutical R&D projects. Results from these analyses show that both R&D project source and project familiarity have significant direct effects on focal project performance outcomes. We also determine that focal project familiarity has a significant moderating effect on the relationship between project source and performance outcome.