Why Innovation and Why Now?

Abstract

For nearly 30 years, organisations have sought innovation from outsourcing their back office information technology (IT), and latterly also their business processes. There are many reasons that companies of various sizes see the benefit of outsourcing particular aspects of innovation, here defined generally for a business context as deploying new and creative ways of achieving productivity or growth (Coulter and Fersht 2010). Quinn (2000) lists reasons that include limited resources and capabilities within the organisation, a shortage of specialist talent, management of multiple risks, attracting talent in the company’s non-specialised areas and getting to market faster. So how can companies achieve innovation through all the various ways of sourcing available? Often they have an ad hoc approach to innovation, or what Linder et al. (2003) call a transactional approach. This approach, however, often fails to leverage organisational learning and develop innovation capabilities within the client firm as they work with suppliers. Clearly, an ad hoc approach cannot create a culture in which external contributions are accepted or welcomed. Moreover, it is difficult to develop innovative processes and measure innovation outcomes when companies innovate on an ad hoc basis.

This chapter is based on material appeared in Oshri et al. (2015) The Handbook of Global Outsourcing and Offshoring, Palgrave, London, 3rd Edition.