Innovation Outsourcing and Knowledge Transfer

Abstract

It is imperative to exist without innovation. Innovation dynamics are complex to understand because both our internal and external environment changes in a non-predetermined direction. This article discusses open and closed innovations as a way of balancing the contribution of each in the process of innovation. With the closed innovation systems, there is non-transfer of the organisational innovation activities to the external environment. Case studies of multinational companies have been used with results showing that open innovation increases network partners thereby increasing the base of ideas and solutions for problem solving. It is a critical objective of the organisation to balance between costs and returns from the internal R and D activities.This research concludes that innovation in companies is not clear cut but this can be countered through outsourcing the Research and Development processes and activities to external players who are experts in areas of internal limitations. Evidence has shown that most innovative companies rely on outsourcing R and D to external players due to limitations that are encountered internally. Success of innovativeness involves interplay between the organisation and partners who are experts in the area of internal limitations. This research was not extended to cover innovation processes of the service industry which remains as an area of concern to be explored.