Sourcing external technological knowledge: a decision support framework for firms

1. Sourcing external technological knowledge: a decision support framework for firms 工碩一 黃郁芸94312036

2. Abstract • Key results from a study of the practices of a number of UK firms and organizations and the development of a Decision Support Framework(DSF) model.

3. Contents • Distributed innovation processes and firm strategy • Technological knowledge sourcing: a decision support framework (DSF) * The conceptual framework: decision making in context* The DSF model • Decision making in practice • Conclusions

4. Distributed innovation processes and firm strategy • Individual capabilities need to be bundled together in broader systems if they are to be valuable. • An increasing proportion of innovations are produced not by individual firms that are self-sufficient with respect to technological resources, but through combinations of capabilities that may be located in other firms and institutions, → the emergence of a distributed innovation process is becoming increasingly evident.

5. Distributed innovation processes and firm strategy • External sourcing may be used to build new technology platform; combinations of technological knowledge and capabilities that open up new business opportunities and establish the firm on a new or modified technological trajectory. • As firms increasingly use these external relationships to acquire new knowledge, they need to develop the capability for learning both how and what to learn external sources.

6. Distributed innovation processes and firm strategy • External technological knowledge acquisition is best seen as being complementary to the development of in-house capabilities rather than a substitute. • In this distributed innovation process, decisions about the sourcing of technological knowledge, the selection of partners and the management of relationships with those partners take on an enormous importance.

7. Technological knowledge sourcing: a decision support framework (DSF) • The conceptual framework: decision making in context • The DSF model

8. The conceptual framework: decision making in context • It is important to mention in this discussion the transaction-cost model development which seeks to explain why there may be a shift from an in-house vertical and hierarchical provision of such research needs towards a more market mediated approach.

9. The conceptual framework: decision making in context Decision making under bounded rationality is performed within the following environment, namely: • lack of information on all aspects of information processing and decision making. • imperfections in perceiving what information is required for effective decision making. • cost and time constraints that limit information searching.

10. The DSF model

11. Core objective Core capabilities Identification of key selection criteria Define problem focus I Decision-Making Prior to Decision Define selection criteria Evaluation of the viability of Different options Search/ Scanning Sourcing / Selection Ongoing management and monitoring Internalisation & Use II Ongoing Decision-Making Evaluation III Post Decision-Making Issues ‘ Corporate Vision ‘

12. stages Key issues • Main user of knowledge? -Timescale of needy/ use? • Resource implications? -Risk/uncertainly? • Is it intrinsically vital knowledge that will keep this business ahead? Define problem focus • Key criteria to be used for decision? • Business dimensions of the problem? • Technological dimensions of the problem(is it within our existing experience)? Define Selection criteria • Dose someone already possess this knowledge in the company • or could someone generate it? • -Who possesses knowledge outside the company or could generate it? Search/ Scanning • Evaluate viability of strategic alliances; contract research; • university research; joint ventures; acquisitions or mergers; • licensing; and supplier/ customer relationships Sourcing/ Selection • How do we gain maximum benefit from the knowledge? • Capabilities required to maximize returns to relationship? • Who is managing the linkage? • What do we need to have in place for it to work? Internalisation And use • How effective was the decision made? • -Impact of project on business and technological capabilities? • How successful are ongoing relationships? Evaluation

13. Decision making in practice • influence - the nature and timing of the decision - External technological knowledge was used as a benchmarking exercise and a cost comparator for in-house projects, or as an exercise to judge whether the external supplier was a good takeover target.

14. Decision making in practice • A key element is the Not-Invented-Here(NIH) syndrome. • The type and nature of the project and partner relating to the use of external technological knowledge process also clearly affected the decision-making process. • Individuals within the firm making the decision about external technological knowledge sourcing are influenced by the characteristics of the firm.

15. Conclusions • An innovation becomes more distributed between firms and organization, firms are going to have to learn not only how to manage such collaborative and contractual relationships, but also how to make the ‘right’ decision in the first place.

16. ~ Thanks for your attention ~