In-house R&D, outsourcing or alliances? Some strategic and economic considerations

Our primary objective here is to suggest when, and under what circumstances is it advantageous for firms to engage in the use of either in-house R&D activity, R&D outsourcing or R&D alliances. The extent to which a firm will use either of these modes is very much dependent on the technology and the nature of its competences: different technologies are at different stages of evolution within any given technological paradigm. Technologies also have different levels of uncertainty and rates of technical change. The decision to collaborate or internalise is also dependent, inter alia, on the nature of the technology relative to the firm''s core competences, and the distance of the firm''s technological activities from the market. Secondarily, we discuss some considerations in the choice partners, due to strategic issues as well as the peculiarities of the innovation process.