The outsourcing process in an R&D context - A Case Study at GKN Aerospace and Volvo Cars

Abstract: Purpose: According to several researchers, outsourcing of R&D activities is on the rise. The outsourcing process in an R&D context differs from other traditional types of outsourcing since it often takes the shape of a project based nature and is therefore generally limited both in time and product quantity (test products, prototypes). Furthermore, outsourcing of R&D activities often involves extended collaboration, innovation, newly developed technology and complicated solutions. Hence, the main objective of this thesis is to build an increased understanding of the outsourcing process in an R&D context by taking on a holistic point of view. Methodology: The research is based on a qualitative case study conducted at GKN Aerospace Sweden AB and Volvo Cars AB. Findings: The two firms’ way of operating exhibit some major differences, the main being flexibility. The differences stem from the fact that Volvo is an OEM whereas GKN is a first-tier supplier. GKN’s outsourcing methods are agile and of an ad hoc character, whereas Volvo’s are rigid and institutionalized. We argue that both firms would probably benefit from finding balance between these two types of outsourcing methods. Furthermore, the difference in flexibility is also a result of operating in separate industries, firm size and organizational structures. Contribution: The thesis contributes to previous literature by describing the outsourcing process in an R&D context from a holistic point of view. By doing so, a number of key elements are distinguished which are apparent and interrelated throughout the whole outsourcing process. Finally, it’s perceived that certain outsourcing literature seems to be less relevant in an R&D context.