Collaborating With the Right Partners

“Not invented here” has become an outdated mind-set in the modern corporation, as shrinking product life cycles and rapid technological evolution have opened corporate attitudes toward external research and development partners. Yet three business school professors conclude that companies should be careful when selecting the partners with whom they collaborate.

Collaborating with suppliers provides the biggest boost to product innovation, found C. Annique Un and Alvaro Cuervo-Cazurra, assistant professors of the University of South Carolina’s Moore School of Business, and Kazuhiro Asakawa, professor at Keio University’s Graduate School of Business Administration. Surprisingly, collaborating with customers didn’t seem to have an effect on product innovation. What’s more, working with competitors could actually slow innovation processes. The authors’ findings are detailed in “R&D Collaborations and Product Innovation,” a forthcoming paper in the Journal of Product Innovation Management. The paper looks at suppliers, universities, customers and competitors as four different types of potential collaborators. “If you’re [a manager] thinking about doing all these collaborations, given constraints on time, money and resources, which one is better? How do you choose? That was one of the motivations behind the paper,” explains Un.

The authors accessed a survey of manufacturing companies operating in Spain, conducted by the SEPI Foundation. In all, 781 companies from the years 1998 to 2002 were included. During that time period, just over one-quarter of all companies reported at least one product innovation, and about one-third of the companies reported at least one R&D collaboration. Collaborations with suppliers and universities were most popular, with about one-quarter of the companies reporting each type, while only 3% of companies collaborated with competitors.

The authors theorize that successful product innovation partnerships depend on two dimensions of knowledge brought to the table by collaborators: the breadth of knowledge and the ease of access to that knowledge. Companies seek to partner for R&D because they need a key piece of knowledge, so a broad knowledge base should provide a wealth of opportunities to combine ideas from different disciplines and diverse perspectives. Thus, universities and customers should make good partners, because their broad knowledge bases should be just the ticket to spark innovation.

On the other hand, that knowledge needs to be accessible in order for the research to bear fruit.