Determinants of R&D Outsourcing at Japanese Firms: Transaction Cost and Strategic Management Perspectives

Authors: Dai Miyamoto

Abstract:

This paper examines the factors, which determine R&D outsourcing behaviour at Japanese firms, from the viewpoints of transaction cost and strategic management, since the latter half of the 1990s. This study uses empirical analysis, which involves the application of large-sample data. The principal findings of this paper are listed below. Firms that belong to a wider corporate group are more active in executing R&D outsourcing activities. Diversification strategies such as the expansion of product and sales markets have a positive effect on the R&D outsourcing behaviour of firms. Moreover, while quantitative R&D resources have positive influences on R&D outsourcing, qualitative indices have no effect. These facts suggest that R&D outsourcing behaviour of Japanese firms are consistent with the two perspectives of transaction cost and strategic management. Specifically, a conventional corporate group network plays an important role in R&D outsourcing behaviour. Firms that execute R&D outsourcing leverage 'old' networks to construct 'new' networks and use both networks properly.

Keywords: Corporate Group Networks, R&D Outsourcing, Strategic Management Perspective, Transaction Cost Perspective.

Digital Object Identifier (DOI): doi.org/10.5281/zenodo.1081575

References:

[1] Y. Doz, and G. Hamel, Alliance Advantage, Boston: Harvard Business School Press, 1998.
[2] R. H. Coase, "The Nature of the firm," Economica, vol. 4, no. 16, pp. 386-405, Nov. 1937.
[3] O. E. Williamson, Markets and Hierarchies, New York: Free Press, 1975.
[4] O. E. Williamson, The Economic Institutions of Capitalism: Firms, Markets, Relational Contracting, New York: Free Press, 1985.
[5] B. J. Barney, "Firm resources and sustained competitive advantage," Journal of Management, vol. 17, no. 1, pp. 99-120, Mar. 1991.
[6] J. B. Quinn, and F. G. Hilmer, "Strategic outsourcing," Sloan Management Review, vol. 35, no. 4, pp. 43-55, summer 1994.
[7] J. B. Quinn, "Strategic outsourcing: Leveraging knowledge capabilities," Sloan Management Review, vol. 40, no. 4, pp. 9-21, summer 1999.
[8] S. Ulset, "R&D outsourcing and contractual governance: An empirical study of commercial R&D projects," Journal of Economic Behavior and Organisation, vol. 30, no. 1, pp. 63-82, Jul. 1996.
[9] F. Cesaroni, "Technological outsourcing and product diversification: Do markets for technology affect firms- strategies?" Research Policy, vol. 33, no. 10, pp. 1547-1564, Dec. 2004.
[10] M. J. Mol, "Does being R&D intensive still discourage outsourcing? Evidence from Dutch manufacturing," Research Policy, vol. 34, no. 4, pp. 571-582, May 2005.
[11] A. Tiwana, and M. Keil, "Does peripheral knowledge complement control? An empirical test in technology outsourcing alliances," Strategic Management Journal, vol. 28, no. 6, pp. 623-634, Jun. 2007.
[12] J. B. Quinn, "Outsourcing Innovation: The New Engine of Growth," Sloan Management Review, vol. 41, no. 4, pp. 13-28, summer 2000.
[13] J. Pfeffer, and G. R. Salancik, The External Control of Organizations: A Resource Dependence Perspective, New York: Harper and Row, 1978.
[14] M. Kodama, "Case study: How two Japanese high-tech companies achieved rapid innovation via strategic community networks," Strategy & Leadership, vol. 33, no. 6, pp. 39-47, 2005.
[15] F. Niwa, "An Inter-industrial comparative study of R&D outsourcing," in Industrializing knowledge: University-industry linkages in Japan and the United States, L. M. Branscomb, F. Kodama, and R. Florida, Eds. Cambridge and London: MIT Press, 1999, pp. 128-156.
[16] S. Domberger, The Contracting Organization: A Strategic Guide to Outsourcing, Oxford: Oxford University Press, 1998.
[17] P. Milgrom, and J. Roberts, Economics, Organization and Management, London: Prentice-Hall International, 1992.
[18] R. Gulati, "Alliance and networks," Strategic Management Journal, vol. 19, no. 4, pp. 293-317, Apr. 1998.
[19] G. Ahuja, "Collaboration Networks, Structural Holes, and Innovation: A Longitudinal Study", in Networks Vol.2, G. Grabher, and W. Powell, Eds. Cheltenham, Edward Elgar, 2004, pp. 115-185.
[20] M. Sako, Prices, Quality and Trust: Inter-firm Relations in Britain & Japan, Cambridge: Cambridge University Press, 1992.
[21] T. Nishiguchi, Strategic Industrial Souring: The Japanese Advantage, New York and Tokyo: Oxford University Press, 1994.
[22] J. H. Dyer, and W. Chu, "The Determinants of trust in supplier-automaker relationships in the U.S., Japan and Korea," Journal of International Business Studies, vol. 31, no. 2, pp. 259-285, 2nd quarter 2000.
[23] C. C. Markides, and P. J. Williamson, "Related Diversification, Core Competences and Corporate Performance," Strategic Management Journal, vol. 15, Special Issue: Strategy: Search for New Paradigms, 1994, pp. 149-165.
[24] A. M. Colpan, "Dynamic Effects of Product Diversity, International Scope and Keiretsu Membership on the Performance of Japan-s Textile Firms in the 1990s," Asian Business & Management, vol. 5, no. 3, pp. 419-445, 2006.