For a long time, outsourcing has been used to carry out any function of management such as general affairs, personnel affairs, accounting, production and marketing for a long time. But recent outsourcing activities have been especially concentrated on the area of information system. Now its application area is expanding continuously, and it started to be utilized in special areas like R&D.
Outsourcing strategy is being highlighted as one of the management strategies to strengthen the original business of a company, moreover there is a trend to use a high level of strategy which is strategically doing outsourcing even for the core function like R&D. In general, a venture company starts its business from small size, outsourcing is a very useful strategy for this venture company to survive in an environment where external business changes abruptly.
According to the situations described above, this study will examine a theoretical base of outsourcing, and in particular it will analyze outsourcing examples of four venture companies in R&D. Two kinds of venture companies are examined: IT(Information Technology) and BT(Bio-Technology), and are selected two companies from the IT area and two companies from the BT area. In this study, main objectives are as follows :
1) Identifying why R&D outsourcing in a venture company is important and what performance can be achieved
2) Analyzing motivations, types, and partner selecting factors of R&D outsourcing in a venture company
3) Analyzing what influential factors affect the degree of R&D outsourcing and its performance
In-depth Case Study for four selected venture companies had done through several meetings and questionnaires with the companies to find the characteristic factors affecting the degree of their R&D outsourcing.
The research questions to be answered and studied to investigate the above objectives are as follows. There are four questions and answers which investigated from this study.
1) What characteristics of a venture company improve the necessity and the performance of R&D outsourcing ?
● Entrepreneurship and high expert knowledge of the CEO
● Reinforcement of core competency through positive utilization of external resources
● Creation of high value through cost reduction and risk avoidance
● Maintenance of firm core competency in R&D
2) What outsourcing partners are selected by a venture company for R&D outsourcing , and how does the selection affect the degree of R&D outsourcing and performance?
● Insurance of expert knowledge from partners' technical ability
● Pursuit continuous relationship through high trust in partners
3) What are the strategic factors of R&D outsourcing in a venture company, and what are the strategic factors affecting the degree and performance of R&D outsourcing ?
● In order to focus on the technology including core competency and high value creation
● In order to reduce R&D periods and its cost
4) Do industrial characteristics and company development stages affect the degree of R&D outsourcing and its performance?
● Outsourcing is needed to meet the fast technology changing in IT area
● The pursuit of outsourcing for financial objectives in the start-up of the company and pursuit of outsourcing for strategic objectives in the growth stage company
From the results of this study, we will find that venture companies attained very useful results in the areas of strategy, economics, and technology from R&D outsourcing.