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UNIVERSITY OF OULU P .O. Box 8000 F I -90014 UNIVERSITY OF OULU FINLAND
A C T A U N I V E R S I T A T I S O U L U E N S I S
University Lecturer Tuomo Glumoff
University Lecturer Santeri Palviainen
Postdoctoral research fellow Sanna Taskila
Professor Olli Vuolteenaho
University Lecturer Veli-Matti Ulvinen
Planning Director Pertti Tikkanen
Professor Jari Juga
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Publications Editor Kirsti Nurkkala
ISBN 978-952-62-1526-6 (Paperback)ISBN 978-952-62-1527-3 (PDF)ISSN 0355-3213 (Print)ISSN 1796-2226 (Online)
U N I V E R S I TAT I S O U L U E N S I SACTAC
TECHNICA
U N I V E R S I TAT I S O U L U E N S I SACTAC
TECHNICA
OULU 2017
C 610
Marzieh Shahmarichatghieh
PRODUCT DEVELOPMENT SOURCING STRATEGIES OVER TECHNOLOGY LIFE CYCLE IN HIGH-TECH INDUSTRY
UNIVERSITY OF OULU GRADUATE SCHOOL;UNIVERSITY OF OULU, FACULTY OF TECHNOLOGY
C 610
ACTA
Marzieh Shahm
arichatghieh
C610etukansi.kesken.fm Page 1 Wednesday, April 5, 2017 3:28 PM
A C T A U N I V E R S I T A T I S O U L U E N S I SC Te c h n i c a 6 1 0
MARZIEH SHAHMARICHATGHIEH
PRODUCT DEVELOPMENT SOURCING STRATEGIES OVER TECHNOLOGY LIFE CYCLE IN HIGH-TECH INDUSTRY
Academic dissertation to be presented with the assent ofthe Doctoral Training Committee of Technology andNatural Sciences of the University of Oulu for publicdefence in Kuusamonsali (YB210), Linnanmaa, on 3 May2017, at 12 noon
UNIVERSITY OF OULU, OULU 2017
Copyright © 2017Acta Univ. Oul. C 610, 2017
Supervised byProfessor Harri Haapasalo
Reviewed byProfessor Pekka AbrahamssonProfessor Marko Seppänen
ISBN 978-952-62-1526-6 (Paperback)ISBN 978-952-62-1527-3 (PDF)
ISSN 0355-3213 (Printed)ISSN 1796-2226 (Online)
Cover DesignRaimo Ahonen
JUVENES PRINTTAMPERE 2017
OpponentProfessor Jari Collin
Shahmarichatghieh, Marzieh, Product development sourcing strategies overtechnology life cycle in high-tech industry University of Oulu Graduate School; University of Oulu, Faculty of TechnologyActa Univ. Oul. C 610, 2017University of Oulu, P.O. Box 8000, FI-90014 University of Oulu, Finland
Abstract
The main objective of this study is to observe product development sourcing strategies over technologylife-cycle stages, including assessing evaluation conditions and strategy formulating models. Thisdissertation approaches product development sourcing from the perspectives of 1) main concepts ofproduct development and technology life-cycles, 2) mapping product development activities overtechnology life-cycles, 3) mapping product development sourcing over technology life-cycles, and 4)a decision making flowchart. The individual findings are further synthesised and a three dimensionalview to analyse the strategic positioning of technology, product and market development as a corecontext of the organisation is presented. This as it is proposed that the product development sourcingstrategies should be analysed and decided according to strategic positioning of the technologies,products and markets and based on the related life-cycle phases. Different product developmentsourcing strategies can increase the competitiveness of the company by effectively managing criticalknowledge of the technology and product development resources.
The dissertation is qualitative and inductive in nature and is based on both, reviewing the literatureand interviewing experienced industrial managers. The empirical material is based on semi-structuredinterviews with R&D managers and meetings with R&D directors. The study was realised byinvestigating historical data on product development activities and sourcing strategies of one of thehigh-tech industry leaders over four technology generations. The technology evolution of all thegenerations are considered and the collected data is analysed to understand if there are any significantrelationships with the literature based findings. The analysis consists of five individual publicationsand related synthesis in this compilation.
The principal results of this study is a product development sourcing framework (PDSF) proposinghow product development sourcing strategies could be managed according to technology maturitylevels by considering the specific needs and motivations of each prevailing situation. This necessitatesthe understanding of the characteristics of different technology life-cycle stages, and evaluatingproduct development activities. This study points out how different models can be utilised to supportthe evaluation. As a result, various factors can be used to support the product development sourcingdecisions for each specific situation, whereas strategy formulating theories are also beneficial as asupport for these decisions.
The main implications include providing a structure, PDSF, to support managers in their decisionson product development activities and sourcing strategies. The created PDSF is an amalgam of seventechnology life-cycles that enable cross-functional investigations over each technology with marketpenetration situation, manufacturing capabilities, product development factors, and sourcing capabilityfactors of all technology products. Aside providing support for selecting suitable product developmentsourcing strategies, this study may also ease the considerations over killing unproductive projects andunprofitable product lines.
Keywords: BCG, core context, knowledge based theory, outsourcing, productdevelopment, product development sourcing, product development sourcing framework,resource based theory, strategic acquisition, strategic alliances, strategy formulatingmodels, technology life-cycle technology maturity, transaction cost theory
Shahmarichatghieh, Marzieh, Tuotekehityksen hankintastrategiat korkean-teknologian elinkaarivaiheissa Oulun yliopiston tutkijakoulu; Oulun yliopisto, Teknillinen tiedekuntaActa Univ. Oul. C 610, 2017Oulun yliopisto, PL 8000, 90014 Oulun yliopisto
Tiivistelmä
Tämä tutkimus tarkastelee tuotekehityksen hankintastrategioita teknologioiden, tuotteiden ja markki-nasegmenttien eri elinkaarivaiheissa. Väitöskirja lähestyy tuotekehityksen hankintaa seuraavistanäkökulmista: 1) tuotekehityksen ja teknologioiden elinkaarien pääkonseptit, 2) tuotekehitystoimin-nat teknologianelinkaarien vaiheissa, 3) tuotekehityksen hankinnat teknologianelinkaaren vaiheissa,ja 4) päätöksenteon vuokaavio. Yksittäiset löydökset on edelleen syntetisoitu ja kolmiulotteinennäkemys teknologioiden, tuotteiden ja markkinoiden kehittymiseen on esitetty keskeisenä konteksti-na organisaatioille. Väitöstutkimus esittää että tuotekehityksen hankintastrategiat pitäisi analysoida japäättää perustuen teknologioiden, tuotteiden ja markkinoiden strategiseen positioon elinkaarivaiheis-sa. Erilaiset tuotekehityksen hankintastrategiat voivat parantaa yritysten kilpailukykyä teknologioihinja tuotekehitysresursseihin liittyvän kriittisen tiedon tehokkaan johtamisen ansiosta.Väitöskirja on luonteeltaan laadullista tutkimusta hyödyntäen induktiivista päättelylogiikkaa perustu-en sekä aiemman kirjallisuuden tarkasteluun, että empiirisesti puolistrukturoituihin haastatteluihinkokeneiden tuotekehityspäälliköiden ja -johtajien kanssa. Tutkimus toteutettiin tarkastelemalla nel-jään eri teknologiasukupolveen liittyviä tuotekehityksen ja hankintastrategioiden historiatietoa jaaineistoa yhdessä johtavassa korkeanteknologian yrityksessä. Tarkasteltujen teknologiasukupolvienteknologiaevoluutiota on pohdittu ja kerättyä dataa on analysoitu mahdollisten merkittävien yhteyk-sien tunnistamiseksi ja ymmärtämiseksi suhteessa aikaisempiin tutkimuksiin ja kirjallisuuteen. Suori-tettu analyysi sisältää viisi erillistä osajulkaisua ja tässä kokoomaosassa esitetyn synteesin.
Tämän tutkimuksen keskeinen tulos on kehitetty tuotekehityksen hankintaviitekehys (PDSF) jokaesittää tuotekehityksen hankintastrategioiden muodostamisen ja valitsemisen perustuen teknologioi-den, tuotteiden ja markkinoiden kypsyysasteisiin, elinkaarivaiheisiin. Tämä edellyttää eri teknologia-elinkaarivaiheiden erityispiirteiden ymmärtämistä ja tuotekehitysaktiviteettien strategista arviointia.Tutkittuja strategisia tekijöitä voidaan hyödyntää tukemaan tuotekehityksen hankintamallin valitse-mista ja päätöksiä.
Tutkimuksen keskeiset implikaatiot sisältävät struktuurin luomisen, tuotekehityksen hankintavii-tekehyksen (PDSF) muodossa tukemaan tuotekehitysjohtajia heidän päätöksenteossaan liittyen tuote-kehityksen hankintastrategioihin. Luotu tuotekehityksen hankintaviitekehys mahdollistaa poikkiorga-nisaatiollisen tarkastelun tuotekehityksen strategisista hallintamalleista huomioiden teknologioiden,tuotteiden ja markkinasegmenttien elinkaaret ja niiden vaikutukset strategiseen päätöksen tekoon.Lisäksi, tämä tutkimus voi myös osaltaan helpottaa tuottamattomien tuotteiden ja tuotelinjojen lak-kauttamiseen liittyvää analyysia ja päätöksentekoa.
Asiasanat: dynaamisten kyvykkyyksien teoria, strategianluontimallit, strategisethankinnat, strategiset liittoumat, teknologian elinkaari, teknologian kypsyys,tietojohtamisen teoria, transaktiokustannusteoria, tuotekehityksen hankinnat,tuotekehityksenhankintaviitekehys, tuotekehitys, ulkoistaminen
8
9
Acknowledgements
I would like to express my appreciation and thanks to my supervisor Professor Dr.
Harri Haapasalo, you have been a tremendous mentor for me. I would like to thank
you for encouraging my research and for allowing me to grow as a research scientist.
Your advice on both research as well as on my career have been priceless. I would
also like to thank my opponent committee members, Professor Dr. Jari Collin,
Professor Dr. Pekka Abrahamson and Professor Dr. Marko Seppänen for serving as
my opponent committee members, I appreciate your advices and comments. I also
want to thank you for letting my defence be an enjoyable moment, and for your
brilliant comments and suggestions, thanks to you. I would especially like to thank
Dr. Arto Tolonen and Dr. Janne Harkonen as my research group members. Arto I
learnt a lot from you, the first time I sat in your lecture I could not imagine we will
work together for more than four years. Janne, you taught me to organise my
thought and work efficiently, I can say working with you was the best part of my
doctoral studies as I had the feeling of being productive, learning and ongoing!
Moreover, I should thank all co-workers in the department of industrial engineering
and management, especial thanks to Professor Dr. Pekka Kess, your professional
and gentle attitude always impresses me, Professor Dr. Jaakko Kujala, thanks for
all your support.
A special thanks to my parent. Words cannot express how grateful I am to my
mother and my father for all your supports. I would also like to thank all of my
friends who supported me in writing, and incanted me to strive towards my goal.
Dear Dr. Zahra Bahraminejad you are my role model in fighting club membership!
Afrooz Darooiezadeh, you are the one walks in when others absolutely walk out!
Elnaz Mirzadeh, you are my inspiring artist with a hand full of rainbows and
unicorns. Anita Golzar you taught me to be happy and meaningful even in the most
meaningless world. Arian Shahmar, thank you for always being there for me,
listening to my sometimes pointless dramas and consulting me all these years.
Tehran, Iran
26 Feb, 2017
Marzieh Shahmari Chatghieh
10
11
Abbreviations and definitions
RBT Resource Based Theory
KBT Knowledge Based Theory
TCT Transaction Cost Theory
R&D Research and Development
TLC Technology Life-cycle:
PD Product development
PDSF Product development sourcing framework
Technology life-cycle Technology life-cycle is pattern of one or
more aspects of technology over time (Albert
et al., 2015, Khalil, 2000).
Product development Product development involves considering
new market needs and reforming those needs
into saleable objects or services (Krishnan and
Ulrich, 2001)
Sourcing strategy: Sourcing strategy continues the process of
supply channel improvement to reduce costs
progressively, which does not mean only price
reduction but decreasing of dependant costs
on the supply chain (Parniangtong, 2016)
High-tech industry High-tech industry is an industry which needs
high levels of scientific or technological
capabilities, with high complexity and
uncertainty (Moriarty and Kosnik, 1989)
Product Development sourcing Product Development sourcing entails a group
of procurement practices to reduce time-to-
market beside quality improvement in any
product development activity (Ragatz at al.,
1997)
12
13
Original publications
This thesis is based on the following publications, which are referred throughout
the text by their Roman numerals:
I Shahmarichatghieh M, Haapasalo H, Distanont A (2013) A comparison of R&D supply chains and service and manufacturing supply chains, International Journal of Synergy and Research, Vol. 2, No. 1–2, pp. 71-89.
II Shahmarichatghieh M, Tolonen A, Haapasalo H (2015) Product life-cycle, technology life-cycle and market life-cycle; similarities, differences and applications, International Scientific Conference on Management of Knowledge and Learning (MakeLearn) & Technology, Innovation and Industrial Management International Conference (TIIM), Bari, Italy 27-29.5.2015.
III Shahmarichatghieh M, Härkönen J, Haapasalo H, Tolonen A (2016) Product development activities over technology life-cycles in different generations, International Journal of Product Lifecycle Management, Vol. 9, No. 1, pp. 14-44.
IV Shahmarichatghieh M, Härkönen J, Haapasalo H, Tolonen A (2017) Product development sourcing over technology life-cycle, International Journal of Procurement Management. In press.
V Shahmarichatghieh M, Haapasalo H, Tolonen A, Härkönen J (2016) Technologies are evolving - Product development and sourcing changes over technology life-cycle?, In Grubbström, R.W, Hinterhuber, H.H., (Eds), PrePrints, Vol. 2, 19th International Working Seminar on Production Economics, Innsbruck, Austria, February 22-26, 2016, pp. 401-414.
Three of the articles have been published in journals and two in conferences, while
all of the five articles have undergone a double blind review process. The author of
this dissertation has been the primary author in all of the original publications. The
researcher has been responsible for formulating the research problems, collecting
the relevant literature, formulating the research questions, coordinating the
collection of empirical material, analysing the material, drawing conclusions and
finally being the primary author in all the four articles. The role of the co-authors
included reviewing and commenting on the article manuscripts of the first author.
14
15
Contents
Abstract
Tiivistelmä
Acknowledgements 9
Abbreviations and definitions 11
Original publications 13
Contents 15
1 Introduction 17
1.1 Background and research environment ................................................... 17
1.2 Objectives and scope ............................................................................... 20
1.3 Research approach .................................................................................. 24
1.4 Research realisation ................................................................................ 28
2 Literature review 33
2.1 Practical level context ............................................................................. 34
2.2 Product development sourcing strategies ................................................ 35
2.2.1 Outsourcing product development ................................................ 35
2.2.2 Strategic alliance .......................................................................... 36
2.2.3 Strategic company acquisition ...................................................... 38
2.3 Technology life-cycle .............................................................................. 38
2.4 Strategy formulating theories .................................................................. 41
2.4.1 Transaction cost theory (TCT) ...................................................... 41
2.4.2 Resource based theory (RBT) ...................................................... 42
2.4.3 Knowledge based theory (KBT) ................................................... 43
2.5 Product development activities evaluation models ................................. 44
2.5.1 Core-context ................................................................................. 44
2.5.2 Boston consulting group matrix ................................................... 45
2.6 Theory synthesis ..................................................................................... 46
3 Research findings 49
3.1 Product development sourcing ................................................................ 49
3.2 Technology life-cycle .............................................................................. 51
3.3 Product development activities over technology life-cycles in
different generations ................................................................................ 54
3.4 Product development sourcing strategies over technology life-
cycle phases ............................................................................................ 61
3.5 Product development sourcing strategies decision making model .......... 65
3.6 Results synthesis ..................................................................................... 68
16
4 Discussion 75
4.1 Conclusions ............................................................................................. 75
4.2 Theoretical implications .......................................................................... 76
4.3 Practical implications .............................................................................. 84
4.4 Evaluation and limitations of the study ................................................... 86
4.5 Recommendations for further research ................................................... 89
List of references 91
Appendices 105
Original publications 107
17
1 Introduction
1.1 Background and research environment
The dissertation studies product development sourcing strategies over technology
life-cycles, to ease the decision making for product development and product
development sourcing strategies. In the past, the patterns of technology emergence
have been corresponding with the disappearance of large companies and the
evolution of start-ups that have replaced the previous industries and companies
(Moore 2011). Nevertheless, the patterns of technological improvement have
changed in recent years. Nowadays the biggest amount of technological changes
are coming either from internal research and development departments of large
companies, or small start-ups who establish new technologies and merge into the
bigger players in the market (Christensen 2013; Moore 2011, 2002, 2005).
Therefore, considering the best practices for product development sourcing at
different situations could be seen as beneficial.
Speed of technology development and technological change have resulted in
challenges with shorter product life-cycles, rapid innovation cycles and increasing
industry clock speed, have resulted even in multiple competing technology
generations simultaneously in the marketplace (MacCarthy et al. 2016).
Technologies influence companies and their sourcing and product development in
many ways. For example, when technologies experience shorter life-cycles,
companies must enhance their product development strength as each technology
life-cycle could squeeze companies weak in product development out of business
(Li and Calantone 1998). Also, sourcing could potentially be considered as means
to provide added product development strength should the mechanism be familiar
enough.
The speed of technological change together with the nature of the technology
influence the internalisation or externalisation of R&D sourcing (Gary 2003). The
technology characteristics determine the extent to which the innovation process can
be internalised (Teece 1986, 1996; Narula 2001), which also affects R&D sourcing.
Nevertheless, the technological trajectories of companies’ are unique, as certain
path dependency prevails and knowledge levels set limitations (Chessborough
2006). Moreover, there are many factors that impact the decisions on how the R&D
sourcing can be arranged, including the level of technological codification,
competencies, acceptable cost levels, expected future profits and such (Huang et al.
18
2009). Hence, the importance of decisions over external/ internal sourcing in
product development is highlighted.
As today’s technologies are demanding, groups of various companies with
different core competences are needed to enable faster and more efficient
development than a single R&D team would ever be capable (Davis and Brady
1998). Many competitors in different high-tech industries are collaborating in
product and technology development (Rice and Galvin 2006), creating a situation
where a new product is not a solid output of a single organisation anymore.
Companies, hence need new tools to step alongside the technological edge points
to be successful. Therefore, considering different product development sourcing
strategies not only can help companies to acquire knowledge easier and faster
(Singh et al. 2002) but also can give them the opportunity to share risks (Kljin and
Geert 2003).
Product development over technology life-cycles and some relevant aspects have
been previously studied by many authors (e.g. Ford and Ryan 1981; Abernathy and
Utterback 1978; Anderson and Tushman 1990; Little 1981; Erickson et al. 1990;
Watts and Porter 1997; Khalil 2000; Linden and Fenn 2003; Rogers 2010; Moore
and Adamson 2011, Routley et al. 2013). These include for example the importance
of decisions along the technology life-cycle for the rate of return on technology
investments (Ford and Ryan 1981). Abernathy and Utterback (1978) emphasise
how company's capacity for capabilities depend critically on its stage of evolution.
Anderson and Tushman (1990) discuss how dominant design is preceded by
technological progress and subsequent technological discontinuity highlighting the
role of product development and technology life-cycles. Erickson et al. (1990)
emphasise the importance of managing technologies effectively to support
company’s product development to focus on technologies that support product
strategy. Watts and Porter (1997) contribute towards technological forecasting and
provide means to combine technological trends. Linden and Fenn (2003) emphasise
how business decisions often depend on a good understanding of the maturity and
evolution of technologies. Rogers (2010) discusses important aspects relevant to
diffusion of innovations. Finally, Routley et al. (2013) explores some of the
dynamics typically associated with technology-based industries. These studies well
address the impacts of technology maturity and aspects of technologies over life-
cycles, all with their distinctive motivations. However, these studies do not directly
enable comprehensively assessing product development activities together with
relevant sourcing strategies in the context of technology maturity.
19
Numerous different sourcing strategies are widely discussed in the literature
including different viewpoints and scopes (e.g. Suarez-villa and Rama 2000; Tyler
and Steensma, 1995; Gilsing et al. 2015; Chiesa and Manzini 1998; Chatterji 1996).
Although, the previous studies have discussed their topics in their own scope
sufficiently, there is a significant gap in defining and studying product development
sourcing strategies. As knowledge can be the most crucial element in product
development, knowledge acquisition plays a pivotal role in product development
sourcing. This is also one of the reasons for differences between product
development sourcing and other types of sourcing. Therefore, this study focuses
particularly on the sourcing strategies of outsourcing, strategic alliances and
strategic acquisition, which fit the product development context from level of
integration (see e.g. Chiesta and Manzini 1998). The discussion on sourcing
strategies often focus on contract and legal definitions (e.g. Williamson 1991;
1983), and not so much on the technical and integration considerations. In general,
previous studies have not covered product development sourcing strategies
sufficiently enough in the context of technology maturity levels. This is a
noteworthy gap in research as product development, especially in high-tech
industries with particular technology centricity.
In the context of product development, different success factors, such as cost,
time, performance and quality have significance for the activities at different stages
of technology maturity. This type of success factors can change based on different
reasons (Eisenhardt and Schoonhoven 1996; Karimi et al. 1996). Therefore a single
viewpoint in decision making is not enough. There are numerous problem solving
and strategy formulating models that can potentially help in assessing the suitability
of relevant success factors. For example strategy formulating theories that have
some variation in their logic have been applied by different researchers, namely
transaction cost theory, resource based theory and knowledge based theory
(Williamson 1991; Coase 2007; Madhok 1997; Das and Teng 2000; McIvor 2009;
Grant 1997; Bierly et al. 1996). The underlying motivation of these theories is cost
reduction and gaining knowledge and resources. The theories define various factors
that are later introduced in this thesis. The factors can be used for formulating a
quantitative decision making process, although this dissertation merely uses the
logics and the essence of these factors and does not utilise the formulas and
quantitative procedure. A combination of the logic and essence of the factors is
utilised in the context of different levels of technology maturity to prioritise
relevant aspects and to gain certain flexibility and a wider perspective for decision
makers to decide about sourcing strategies.
20
In this dissertation, three theories of transaction cost, resource based and
knowledge based theory are utilised. Each of these theories contains a group of
factors and logic that are individually useful, but are not studied adequately as a
combination in the context of this study. The compilation of the three theories
provides a more comprehensive viewpoint to assess different situations.
Transaction cost theory, in principle discusses the cost efficiency which is the
fundamental target of almost any organisation that wants to be profitable
(Williamson 1991). Accordingly, resource based theory is utilised to provide
alternative consideration to the cost factors. Resource Based theory, considers
resources of a company as the tools to remain competitive in the market area, while
the company must fill the gaps between its own capabilities and the ideal
capabilities that are needed to be competitive in the market area (Grant 1991;
Conner and Prahalad 1996; Madhok 1997; Das and Teng 2000; McIvor 2009).
Therefore, resource based theory can cover not only internal technological
capabilities but also market situational factors. Moreover, the third employed
theory is knowledge based theory, a logic that considers knowledge as part of
company’s assets, for example tangible assets and view them as the most significant
assets of any company on which the companies can build their competencies based
on the knowledge and competencies accordingly in the market area (Sveiby 2001;
Grant 1996; Malmberg and Maskell 2002). Knowledge based theory is used due to
pivotal role of knowledge in product development processes and the fact that
knowledge can be the trump card in sourcing product development especially in
the high-tech industry. The differences and similarities in addition to pros and cons
of each theory are discussed by different authors (e.g. Poppo and Zenger 1998;
Madhok 2002).
Due to all the changes in the technological environment and importance of
companies’ product development efforts the technology life-cycles have become
more important to understand. Regardless of the operating environment, also
product development needs sourcing to optimally support reaching the targets
necessitated by different technological situations. Product development and related
sourcing activities require research in the context of different technological
situations to enable successful decision making by companies.
1.2 Objectives and scope
The key motivation for this dissertation arises from the numerous studies on
product development sourcing from different perspectives while regardless of
21
previous research, finding a suitable product development sourcing strategy to
address the varying needs along technologies’ life can be a challenge. Sourcing
strategies do not adequately acknowledge the linkages along changing technologies,
products and markets based on life-cycle phases. Hence, this study aims to observe
different aspects of strategic product development sourcing along technology,
product and market life-cycle phases, evaluating conditions, and strategies under a
unified umbrella. Therefore, the research problem of the dissertation is formulated
as:
How can product development sourcing strategies be analysed and decided
over technology, product and market life-cycle phases?
There might be various ways to approach the research problem in more detail.
However, in this dissertation the problem was studied from four complementary
perspectives ̠ 1) main concepts of product development and technology life-cycles,
2) mapping product development activities over technology life-cycles, 3) mapping
product development sourcing over technology life-cycles, and 4) a decision
making flowchart. The research problem was broken down to into five detailed
research questions according to the four perspectives as shown in table 1. Each
individual research question that contributes to the whole formed by the entire
thesis is attempted to answer in more detail with an article, of which three are
Journal articles and two conference papers. The main contribution of each article
is presented in this dissertation.
Table 1. Research papers overview.
Article RQ Article title Name of the
journal
I 1-How can product development
sourcing be defined and differentiated
from manufacturing and services
sourcing strategies?
A Comparison of R&D Supply Chains
and Service and Manufacturing Supply
Chains
International
Journal of
Synergy and
Research
II 2-How can a technology life-cycle be
defined for product development and be
differentiated from other life-cycles?
Product life-cycle , technology life-cycle
and Market life-cycle; similarities,
differences and applications
MakeLearn
and TIIM joint
conference
2015
III 3-How is product development different
over technology life-cycles?
Product development activities over
technology life-cycles in different
generations
International
Journal of
Product
Lifecycle
Management
22
Article RQ Article title Name of the
journal
IV 4-How can product development
sourcing strategies be mapped over
technology life-cycles?
Product Development sourcing over
Technology Life-cycle
International
Journal of
Procurement
Management
V 5 How can product development
sourcing strategy decisions be analysed
and made along strategic positioning and
life-cycle phases of technologies?
Technologies are evolving - product
development and sourcing changes
over technology life-cycle?
19th
Production
economics
working
seminar -
Innsbruck
The research questions all provide a partial contribution to the research problem
and are all related to each other. Figure 1 depicts the positioning of the articles and
the research questions in the logic of the dissertation. Each article tries to fill its
own research gap while all of them together make this dissertation.
Article one, tries to shape the definition and concept of product development
sourcing by making a distinction to better known manufacturing and services. As
there are different aspect that can depict differences between the sourcing channels,
each sourcing channel was seen as a system that should transform inputs into
outputs while there are specific requirements that should be taken into account.
Accordingly, inputs, outputs and the manufacturing specific characteristics of
services and R&D were compared. Therefore, flexibility, competitiveness, cost,
quality and innovation are discussed in addition to the characteristics of inputs and
outputs of each sourcing channel. As the speed of product development can play a
crucial role in the success of new products, the speed is weighted more in product
development sourcing compared to sourcing for manufacturing and services.
Therefore, the importance of core competence is emphasised because of the timing
significance in product development sourcing.
Article two aims to define the second founding concept of this dissertation:
technology life-cycle. Product life-cycle which is the most popular life-cycle in the
maturity considerations is compared with technology life-cycles. Additionally,
market development life-cycle is compared with technology life-cycles as both of
them can be based on technology penetration in the market area. The second article
provides a more concrete definition of a technology life-cycle. As there are various
technology life-cycles from various viewpoints, the third article identifies seven
different technology life-cycles that are more related to product development and
23
product development sourcing and tries to combine them to build a unified structure.
Hence, the research question two is answered partially also in article three aside the
second article.
In this stage the two main fundamental concepts of the dissertation, product
development sourcing and technology life-cycle had been studied and defined. The
third article, after presenting the combination of seven technology life-cycles, also
presents the characteristics of product development activities in each technology
life-cycle stage. The third paper shows the importance of cost reduction over time
and knowledge capability prioritisation in the beginning of technology life-cycle
for product development activities.
The fourth article maps product development sourcing strategies over
technology life-cycles. The chosen sourcing strategies in the article are outsourcing,
strategic alliances and strategic acquisition. Variations in sourcing strategies have
had considerable developments recently. Over time when technologies develop
along their life-cycles, certain developments take place. In the beginning of a life-
cycle sharing information may not be in favour of companies, therefore due to the
high growth of technologies and market, companies might be looking for expertise
to outsource their non-core competence with lowest possible levels of information
sharing. Although later along the life-cycle, as the products get more complex and
companies could have core-competence in a single area, the organisations may try
to build strategic alliances. Accordingly, especially in high-tech industries, the
small start-ups may transform into market killers and their ambitious mind-set can
drive them to build integrated systems which need enormous amounts of
information, risk and expertise sharing. Company mergers suddenly can become an
option. The companies may gain a lot of money, they can be ambitious and market
and industry can still be growing, therefore buying small start-ups with novel
knowledge capabilities, or big companies with massive market share, capabilities
and considerable properties can become a trend and lots of strategic acquisitions
may take place. Consequently, the fourth article provides a clear view over the
sourcing strategies trend over time for different technology generations. In addition,
three strategy formulation theories are discussed in the fourth article, namely
transaction cost theory, knowledge based theory and resource based theory, which
are used to evaluate sourcing strategies over technology life-cycles from different
perspectives. The fourth article specifically maps product development sourcing
over technology life-cycle stages.
The fifth paper utilises the interconnected articles of this dissertation and
presents a flowchart for making decisions about product development sourcing
24
strategies. The flowchart evaluates product development activities by technology
life-cycles, core context matrix and BCG matrix. Accordingly, the evaluation data
is considered under the requirements of transaction cost theory, resource based
theory and knowledge based theory. The chosen sourcing strategies considered in
this dissertation are outsourcing, strategic alliances and strategic acquisition.
Fig. 1. The positioning of the articles and research question in the logic of the
dissertation.
1.3 Research approach
Philosophical viewpoint to scientific research entails ethical, ontological and
epistemological questions (Lancaster 2005), including the questions of whether the
reality can be seen as the same, or nearly the same as a scientific research, whether
the acquired knowledge is gained ethically and how is it obtained, when is the
knowledge scientific, and whether the researcher is abusing the research object or
otherwise acting unethically. Ontology refers to the reality where studied
phenomena are understood to reside and how the phenomena relate to this reality.
In other words ontology is concerned with the nature of social entities (Saunders
2009; Collis et al. 2003). The methodology and the studied phenomena should be
chosen properly, to have the logical and ethical impact on scientific research.
25
Moreover, the reliability of the scientific research should be assured by a proper
methodology.
Epistemology is concerned of what is, or should be, referring to what is
regarded as acceptable knowledge in a discipline. In this context a central issue is
the question of whether or not the social world can, and should be, studied
according to the same principles, procedures and philosophy as the natural sciences.
(Saunders 2009). Epistemology can be outlined along the axis of positivism and
interpretivism (Saunders et al. 2007). Positivism is a natural science epistemology
that is seen as extremely difficult to be outlined in a precise manner. The only
phenomena and knowledge that can be assured through senses can be considered
knowledge according to positivism (Saunders et al. 2007). In contracts,
interpretivism, shares the view that the subject matter of social sciences, people and
their institutions is fundamentally different from the one of natural sciences.
(Saunders et al. 2007). When considering this study along the axis of
epistemological positioning, it can be said that the study is closer to interpretivism
as the objective is to analyse factors that relate to product development sourcing
strategies over technology life-cycles, phenomena that cannot be assured through
senses as the natural science epistemology of positivism would necessitate.
Ontology relates to the questions of whether the social world should be
considered as external to the social actors or if people are part of the process of the
approach (Bryman & Bell 2003). The nature of social entities are among the
concerns of ontology. Also ontology can be roughly viewed along an axis with two
ends, namely objectivism and subjectivism. The ontology of objectivism relates to
the question of whether social entities can, and should be considered objective
entities with an external reality to the social actors (Bryman & Bell 2003; Saunders
2007). Objectivism implies that social phenomena confront us social actors as
external facts that are beyond our reach or influence. Organisations can be
discussed as tangible objects, ones that have rules and regulations, ones that adopt
standardised procedures for getting things done (Bryman & Bell 2003, Saunders
2007). On the other hand, subjectivism relates to the question of if social entities
can, and should be considered as social constructions built up from the perceptions
and actions of the social actors (Bryman & Bell 2003, Saunders 2007).
Subjectivism hence challenges the suggestion that categories such as organisation
and culture are pre-given and that social actors are external realities. Social
phenomena are created by social actors and are therefore highlighted as their
individual experiences. The social order may be negotiable and consists of agreed-
upon patterns (Saunders 2007). This study, however, does not strictly follow neither
26
ends of the axis in terms of ontology, but can be considered to follow pragmatism,
an otology where the researcher is allowed to choose viewpoints from both of the
above described ontological positions so that the guiding factor is the suitability of
those ontologies for the research questions (Saunders 2007).
The research strategy entails considerations over the type of reasoning and the
manner of investigation. The consideration over type of reasoning entails
understanding and making a distinction between data being used to test existing
theories, or if the data is utilised to form new theory. The type of research that tests
existing theories is realised by using deductive reasoning, whereas the reasoning
for research forming new theory is inductive. Deductive research would form
hypotheses based on existing theories and would test those hypotheses, whereas
inductive research has the aim of generalising based on observations and analysis
to form new theory. (Bryman & Bell 2003). The logic of reasoning in this study is
inductive as generalisation is attempted and the conclusions are based on factors
arising from the data. The manner of investigation in this study is qualitative to
gain a level of practical insights to product development sourcing strategies over
technology life-cycles. Regardless of the selected manner of investigation, it might
be possible to study the topic from various angles using quantitative approach, or a
combination of both qualitative and quantitative approaches. The motivation for
selecting qualitative approach lies in the possibilities of obtaining more in-depth
knowledge on product development sourcing strategies over technology life-cycles.
Also, the realities of the researcher and the true possibilities of obtaining data
suitable for quantitative analyses impacted the selection on how to investigate.
Qualitative nature of the study allows to explore the studied phenomenon (Ghauri
& Grønhaug 2005) in ways that might not be possible by utilising a quantitative
approach. Also the sample to be utilised when using qualitative approach is
discretionary to the researcher, yet the emphasis is on the quality of input material
that must be adequate for the type of analysis and interpretations (Siggelkow 2007).
Hence, qualitative research may provide the researcher some freedom, but
simultaneously the researcher can be bound by their own values and limitations
when describing true realities. As a consequence, it may be impossible to be fully
objective as the studied phenomenon and the researcher are interlinked. As a result,
all research can be considered as subjective as the researcher’s own understanding
plays a role and may influence the results to some degree. For this reason, all
research is subjective, as the researcher’s own understanding may influence the
results to some extent (Eisenhardt 1989, Yin 2003, Kasanen et al. 1993, Denzin &
Lincoln 2005, Patton 2005). Advantages of qualitative research include the fact that
27
in case of misunderstandings, or other failures, the researchers and interviewees
can find them and correct the mistakes. Nevertheless, this could potentially be seen
as a problem that influence the objectivity of the entire research (Denzin and
Lincoln 2005, Kasanen et al. 1993, Siggelkow 2007, Marshall and Rossmann 2014,
Patton 2005, Yin 2003, Eisenhardt 1989).
The research design of this study is a combination of constructive case analysis
and qualitative hermeneutical research cycles. The constructive research design was
originally proposed by Kasanen et al. (1993). The constructive research design
relies on a pragmatic notion of truth, i.e. “what works is true”, and the researcher’s
role as intervener is a characteristic of the research process (Lukka 2003). There
are seven essential steps in constructive research (Kasanen et al. 1993, Lukka 2000,
2002), including 1) Finding a practically relevant problem that has research
potential; 2) Examining the potential for long-term research co-operation with the
target organisation; 3) Obtaining a general and comprehensive understanding of the
topic; 4) Innovating and constructing a theoretically grounded solution; 5)
Implementing the solution and test whether it works in practice; 6) Examining the
scope of the solution’s applicability; and 7) Showing the theoretical connections
and the research contribution of the solution. Although the important difference of
constructive research to common problem solving is the capability of acquiring a
solution to be generalised for other similar problems (Lukka 2003). Additionally,
some other factors should be found in the proposed solution of a constructive
research which are: simplicity, sophistication, completeness and user friendliness
(Jarvinen 2001). On the other hand, hermeneutics constitutes one possibility of
theories of interpretation to gain understanding on product development sourcing
strategies over technology life-cycles. One central term in hermeneutics is the
“hermeneutic circle”, or the “hermeneutical research cycle”, where in the search
for meaning of a text, an action or a set of ideas, and so on, the interpretation of a
part requires a prior understanding of the whole to which the part belongs, and the
interpretation of a whole requires a prior understanding of its parts (Mautner 2000).
Nevertheless, as often criticised, the hermeneutic circle cannot reach final closure,
but is rather often described as an ongoing spiral. The spiral is ongoing and can
never be fully verified, but can be refuted or corroborated as a result of withstanding
refutation (Popper 1959, Popper 1963). Hence, moving along the hermeneutic
circle entails moving towards improved understanding over on product
development sourcing strategies over technology life-cycles. Figure 2 illustrates
the choices made in terms of philosophy, research strategy and research design.
28
Fig. 2. Positioning of the philosophical, research strategy and research design choices.
1.4 Research realisation
Product development sourcing strategies unlike other sourcing strategies are
particularly knowledge based, especially in high-tech organisations. Therefore,
knowledge acquisition entailing, labour, materials and property rights make the
product development sourcing more complicated. The future of any company in
high-tech industry can partially be defined by the product development strategies,
making the decisions about sourcing strategies rather critical. Hence, as the topical
area was found to have research potential, and the researcher was particularly
interested in understanding the impact of technology maturity levels over life-cycle
phases and how product development sourcing strategies position along the
technology life-cycle, the topical area was partially decided based on this. However,
also the industrial interests and needs impacted the scope of the research topic by
adding to the analysis and linkage of product and market life-cycle phases.
The study was initiated with an extensive literature review to compare R&D
supply chains, and service and manufacturing supply chains based on previous
research, mostly focusing on high-tech industries. This was to support the general
and comprehensive understanding of the significance of product development
sourcing by understanding the R&D supply chains in comparison to other type of
supply chains. These efforts resulted in the first publication for this dissertation.
The first publication was fully based on reviewing previous literature.
29
Equipped with the understanding obtained from the first publication, the
research was continued with another extensive literature review, now focusing on
the product life-cycle, technology life-cycle and market life-cycle; similarly to
obtain general and comprehensive understanding of their differences and potential
applications. This literature review effort also had a particular focus on high-tech
industries. These efforts provided a good understanding of technology and product
life-cycles to also support the later study phases. This literature review resulted in
the second publication for this dissertation.
At this stage, the understanding of the parts relevant to the topic of the thesis
was such that it was imperative to involve a suitable target organisation. The choice
for target organisation was influenced by the potential for long-term research co-
operation, but also based on the opportunity to have an access to a company that is
one of the world leaders in its business. The empirical part of the study consists of
analysing a high-tech infrastructure provider, their experiences, and their data on
three technology generations. The well-known company operates in business-to-
business markets providing high-tech products and equipment to a variety of
customers. The company has a significant number of employees, operations in over
100 countries with a significant revenue. The data that is utilised in three separate
publications is collected qualitatively during nine comprehensive semi-structured
interviews (Merton et al. 1990). The motivation for collecting the data for the last
three articles simultaneously lies in the practical reasons. The interviewees consist
of R&D managers who have been working for the company over different
technology generations. In addition to the interviews, also four group meetings with
seven participants were held with high-level R&D directors whom have been
influential in strategic decisions and are aware of market and technology
fluctuations in the industry. The interviews were recorded to enable thorough
analyses, while the interview atmosphere was informal to gain more accurate data.
Aside the semi-structured interviews the data sources included personal
observations, and company confidential material. The variety of analysed material
enabled triangulating and cross-verifying the findings (Yin 2003) and also helped
to ensure reliability of the research.
The third publication is based on both, the understanding obtained through the
literature and the collected empirical material. The publication focuses on product
development activities over technology life-cycles in different technology
generations. The paper positions true technology generations along a technology
life-cycle and analyses the focus of product development activities in different
situations. The interpretations required here required understanding of the whole
30
created by the previous two publications and therefore further builds on that
understanding. In some way this publication still contributes towards obtaining
understanding on the topic of the thesis, while building towards constructing a
theoretically grounded solution.
The fourth publication is also based on the previous understanding of literature
and the collected empirical material. The paper has a particular focus on product
development sourcing over a technology life-cycle. Product development activities
are analysed along a technology life-cycle by considering the priority of each
analysed sourcing strategy based on the strategy formulating theories. The trend of
sourcing strategies in the studied case company is also presented as a part of a
technology life-cycle. This paper particularly contributes towards innovating and
constructing a theoretically grounded solution, whilst required building on the prior
understanding gained through the previous papers.
The fifth publication as well builds on the previous understanding of literature
and the empirical material. This paper particularly focuses on creating a decision
making flow chart for product development sourcing strategies based on the
obtained understanding. This also contributes towards innovating and constructing
a theoretically grounded solution. As the study aimed at creating a structure that
could be used for other cases and companies the decision making flow chart is quite
general.
In addition to the published papers, the results from all the five papers are
further synthesised and presented in this compilation dissertation. The synthesis
proposes how the product development sourcing strategies should be analysed and
decided according to strategic positioning of the technologies, products and
markets and based on the related life-cycle phases. This clarified understanding
provides a unique contribution of the compilation.
The scope of the solution’s applicability is assessed together with the seven
participants of the four group meetings with high-level R&D directors. It can be
seen that a weak market-test has been carried out based on meetings with managers
and specialists who were utilised to verify the results. Comments have also been
obtained via email from industrial persons who have interest in the topic.
Accordingly, three different market tests based on managerial implications are
defined by Kasanen et al. (1993), weak market test, semi-strong market test and
strong market test. The strength of market test is according to number of companies
who applied the solution, while the strong market test happens when the models can
lead to better result compared to other models. Although, Lukka (2000) believes
that in constructive case study market test can be done only under the borders of a
31
weak market test. Apparently, the study should become useful by proofing that it has
the capacity of being generalised and as Labro and Tuomela (2003) admit the
results should be transferable. However, as the results can probably never be fully
verified due to the selected methodology, it can be said that the thesis provides
improved understanding over product development sourcing strategies and related
decisions over technology life-cycles. Additionally, the theoretical connections and
the research contributions of the created solution are attempted to be presented to
the best ability of the author. Table 2 represents the data resources, data collection
and data analysis of each article of this dissertation.
Table 2. Data analysis in each original study.
Publication Data sources Data collection Data analysis
I Literature review mostly
focusing on high tech
industry
Literature search Qualitative and constructive
case analysis
II Literature review mostly
focusing on high tech
industry
Literature search Qualitative and constructive
case analysis
III 9 R&D managers and 4
group meeting with 7 R&D
directors in addition to the
literature analysis related to
high tech industry.
The same data was utilised
for papers III, IV and V.
Recorded and transcribed
semi-structured interviews,
Company documentation,
Literature search,
Observation
Recorded and transcribed
The same data was utilised
for papers III, IV and V.
Document analysis,
qualitative analysis of
interview results, qualitative
and constructive case
analysis
IV Qualitative and constructive
data analysis
V Qualitative and constructive
data analysis
32
33
2 Literature review
The literature review provides an overview of the key theoretical perspectives that
are relevant to this dissertation. This study evaluates the best product development
sourcing strategies, over technology life-cycles. Hence, product development
sourcing strategies are discussed. Three different product development sourcing
strategies are selected in accordance with the level of integration: outsourcing,
strategic alliances, and strategic company acquisition (Chiesa and Manzini 1998).
Product development sourcing strategies are discussed in conjunction with three
strategy formulating theories of transaction cost theory, resource based theory, and
knowledge based theory. These are discussed to enable evaluating both sourcing
strategies and product development conditions. However, investigating product
development sourcing strategies without adequate knowledge about product
development activities would be meaningless, therefore two models are discussed
as product development activities evaluation models, namely Boston Consulting
Group Matrix (BCG), and Core-context matrix. BCG and the Core-context model
are tried to describe in technology life-cycle foundation to have a single unique
structure which can include various aspects. Figure 3 describes the theoretical
frame of this dissertation.
Fig. 3. Theoretical frame for the dissertation.
34
As the scope of the study cannot contain all the subjects related to product
development sourcing, there are various factors and insights which are intentionally
excluded from the study to keep the study focused. For instance lots of parameters
in market area are excluded such as branding, and marketing activities, moreover,
product development models and efficiency improvement methodologies are not
covered in this study. Instead, the sourcing strategies are studied and exemplified
only for product development and are not considered in accordance with
manufacturing or mass production circumstances.
The order of the following sections has been influenced by the theoretical
foundation of this study. Product development sourcing is part of this foundation,
therefore, in chapter 2.1 product development sourcing strategies are discussed first
to define them clearly before approaching the decision making process. Thus,
outsourcing, strategic alliances and strategic acquisition are chosen based on the
level of integration and described first. As technology life-cycle also is a part of the
foundation of this dissertation, seven different technology life-cycles are discussed
in the chapter 2.2, which aims to clarify the second foundation of the thesis.
After defining the fundamental concepts of the thesis two levels of evaluation
are discussed to consider the decision making aspects. The first level entails product
development activities evaluation, which aims to seek influential factors of product
development on strategy. The models discussed include core-context model and
BCG, in which technology life-cycle considerations are utilised.
The second level of decision making discussed entails applying three different
strategy formulating theories: transaction cost theory, resource based theory, and
knowledge based theory. These are studied to support the evaluation different
product development sourcing strategies based product development activities. The
strategy formulating theories are discussed in chapter 2.3.
2.1 Practical level context
Technologies are emerging and growing in a fast pacing environment. In the past,
the emergence of new technologies resulted in disappearance of previous
technologies and companies accordingly; the story of Kodak and appearance of
digital photography is the most well-known example in the area (Lucas and Goh
2009). As Kodak had a significant disruptive technology in its hands, other
companies either disappeared or merged as technologies pass through technology
life-cycle or market development life-cycle. Companies such as Compaq
(Burgelman, and McKinney 2006) or Nokia on the other hand had their destiny set
35
to apparent instance of having technical capabilities but not utilising proper
strategies Aspara et al. 2011).
In general, the companies have learned to sync the speed of their development
with the technology life-cycle pace. Therefore, they are using various strategies just
to be agile, fast and flexible to be kept in the competition. No matter whether they
are internalising or externalising, they are trying hard to be there. Companies are
investing a lot on internal resources on product development, for example Apple
spent 10 billion dollars on R&D just in 2016 (Bajarin 2016). Additionally, strategic
acquisitions of start-ups can help in gaining edge point via the attainment of
technological applications, and has therefore been another regular strategy of
companies such as Google (Battelle 2011).
Strategic alliances have been another beneficial way for companies to remain
fast and adequately comprehensive from technological viewpoint, of which the
famous alliance by IBM and Apple is probably the most obvious example (Stafford
1994). Although, there is always a possibility of failure in any strategic decision as
demonstrated by the strategic alliance of Volkswagen and Suzuki (Crisan 2013). As
the technology, industry and markets get mature, the likelihood increases that the
further development will be replaced by novelty of a new idea, therefore, for more
mature technologies open sourcing can be viable alternative as companies such as
GE and Starbucks have wide well-known open sourcing pool (Jones 2012).
2.2 Product development sourcing strategies
2.2.1 Outsourcing product development
Outsourcing product development can be defined as the situation when a company
buys the outcome of other company’s product development activities (Chiesa and
Manzini 1998). Apparently cost efficiency is one of the most significant priorities
of any company, numerous studies have shown the positive effect of outsourcing
on cost efficiency (e.g. Masten et al. 1991, Monteverde 1995, Afuah 2001, Leiblein
and Miller 2003, Rothaermel and Deeds 2006, Spithoven and Teirlinck 2015). Das
and Teng (2000) argue that outsourcing can minimise transaction costs while in
contrast maximising production costs, although all the cost effects of outsourcing
strategy are dependent on other factors such as frequency, flexibility, uncertainty
and asset specificity (McIvor 2009).
36
Moreover, knowledge acquisition in any form plays a pivotal role in choosing
product development sourcing strategies (e.g. Rothaermel and Deeds 2006, Cohen
and Levinthal 1990, Afuah 2001, McGrath and McMillan 2000; Gupta and
Polonsky 2014), thus many authors have proved the constructive role of
outsourcing on knowledge transfer within companies (Lawson et al. 2014, Zhao et
al. 2014).
Although outsourcing, like any other strategies, besides having any advantages,
outsourcing can have its own hazards such as being exposed to opportunistic
behaviour (Handley and Angst 2015, Bhattacharya et al. 2015) and other
governance issues such as organisational complexity that can potentially lead to
increased total costs (Jacobides and Billinger 2006).
Consequently, the final aim of any sourcing strategy is keeping resource
allocation in its best shape (Hamel and Prahalad 1994, Quinn 2013, Teece et al.
1997). Consequently, different authors have tried to evaluate product development
outsourcing from resource based theory perspective (e.g. Cassiman and Veulgeres,
2000, Kozlenkova et al. 2014), which can be concluded as keeping the company
size smaller by outsourcing non-strategic activities (Mowery and Rosenberg 1989).
2.2.2 Strategic alliance
Strategic alliances are defined as sharing resources of various organisations to gain
shared innovative results (Chiesa and Manzini 1998). Strategic alliances can be
induced by technological gaps (Hagedoorn 1993, Tyler and Steensma 1998, Gilsing
et al. 2015), sharing risks and uncertainties (Dickson and Weaver 1997, Collet and
Philippe 2014) and internationalisation (Yoshino and Rangan 1995, Brouthers et al.
2014). Some studies have tried to describe strategic alliances from a transaction
cost theory perspective via clarifying the levels of transaction costs (Gulati 1995),
although also other cost centric factors can be used to evaluate strategic alliances,
such as stability (Parkhe 1993), flexibility (Young-Ybarra and Wiersema 1999),
and continuity (Olk and Young 1997).
Moreover, opening the borders of an organisation might have some perils as
well and a strategic alliance is not an exception among other external sourcing
strategies, therefore many researchers have tried to estimate the risks and build
models to reduce and overcome the possible risks (e.g. Parkhe 1991, Williamson
1983, Galanter 1981, Buvik and Halskau 2016, Oumlil and Williams 2011). For
instance, Parkhe’s model aims to organise strategic alliance while preventing
possible opportunistic behaviour.
37
Resource based theory discusses situations where critical resources and
capabilities are owned by other companies when obtaining special assets internally
is costly and time consuming. In this type of situations a strategic alliance might be
a beneficial sourcing strategy (Ramanathan et al. 1997, Madhok 1997). Although,
Das and Teng (2000) count the organisational governance capabilities as an
important condition for having a successful strategic alliance in the mentioned
circumstances.
Patents can also be considered as one measure of strategic alliance partner’s
technological capabilities and a motivation for alliances (Mowery et al. 1996). In
terms of creating new technology, forming an alliance can be beneficial from the
patent perspective so that he level of joint patents initially increase and then
decrease beyond a certain level of path dependence, joint patenting often being a
result of successful R&D collaboration (Kim and Song 2007). The usefulness of
alliances is seen to increase with technological distance as Rosenkopf and Almeida
(2003) suggest that firms can employ knowledge acquisition mechanisms to fill in
the holes of their existing technological context. Even though new wisdom may be
received through an alliance, alliance activity can also promote increased
specialisation (Mowery et al. 1996). On the other hand, for example Stuart (2000)
demonstrate that firms with many prior patents are more likely to form alliances
than those lacking of patents. According to Gomes-Casseres at al. (2006) the
knowledge flows seem to be affected by characteristics of the partners, in particular,
their technological and business fit to their geographic origins and their
size. Appropriateness and the degree to which companies can protect their
innovative capabilities through patents is seen as one of the crucial factors in
understanding the choices made with strategic alliances (Teece 1986).
From the perspective of knowledge based theory, a company has to own
knowledge and capabilities to be able to build applicable and compete products
from a technology, (Amit and Schoemaker 2012, Teece et al. 1997), when the
needed knowledge is not inherent to an organisation. In this type of situations a
company can enter an alliance to gain the knowledge and capabilities (Hagedoorn
1993, Rothaermel and Deeds 2006, Wei et al. 2000, George et al. 2002, Patzelt et
al. 2008). Although the success of choosing the strategy is dependent on many
factors such as the internal absorptive capacity of an organisation (Nelson and
Winter 2009, Powell et al. 1996, Leiblein and Miller 2003, Mayer and Nickerson
2005).
38
2.2.3 Strategic company acquisition
Technology and knowledge acquisitions are crucial incentives for buying another
companies (Chiesa and Manzini 1998, Chatterji 1996). Additionally, shortening the
time to market in product development can be a cause for strategic acquisitions
(Chatterji 1996, Chiesa and Manzini 1998, Roberts and Berry 1984). Also some
other issues such as widening the business into new geographical markets can be a
motivation for acquisitions (Harrison et al. 1991).
Accordingly, Oster (1990) discusses strategic acquisitions from transaction
cost theory viewpoint and believes that acquiring a company can be due to having
a commercial bargain or optimising the processes. Moreover, Hennart and Raddy
(1997), besides accepting Oster’s idea, present some hazards of strategic
acquisitions including differences in organisational culture and mandatory pre-
hired employees. On the other hand, Kogut (1988) believes that reasons other than
transaction costs are leading to strategic acquisitions.
Factors such as cost, business capabilities, technological competence (Stettner
and Lavie 2014), brand name, market acquisition (Yip 1982) and knowledge
acquisition (Ferriera et al. 2014) are known as other inducements for acquiring
companies. As knowledge acquisition is a known and powerful reason of strategic
acquisition, Hennart (1988) has focused on it more specifically and represents how
both local market knowledge and technological knowledge can be acquired by
strategic acquisition. Moreover, from resource based viewpoint, internal
capabilities both technological capabilities and managerial skill are extremely
important motivations for the buyer company for choosing strategic acquisition
(Zenjan 1990, Wilson 1980, Hennart and Raddy 1997, Stettner and Lavie 2014).
2.3 Technology life-cycle
Technology life-cycle is pattern of one or more aspects of technology over time
(Albert et al. 2015, Khalil 2000). Therefore, different aspects of technology can
lead to building different technology life-cycles with different stages (e.g. Ford and
Ryan, 1981, Abernathy and Utterback 1978, Anderson and Tushman 1990, Little
1981, Erickson et al. 1990, Achilladelis 1993, Achilladelis et al. 1990, Watts and
Porter 1997, Khalil 2000, Linden and Fenn 2003, Rogers 2010, Moore and
Adamson 2011, Routley et al. 2013). This dissertation focuses more on seven
technology life-cycles which represent product development either wholly or
partially.
39
The most general technology life-cycle with four different stages belongs to
Fisher and Pry (1971), a life-cycle that was developed further by Khalil (2000). The
life-cycle illustrates pattern of technology performance over time with four stages:
embryonic, growth, maturity and aging. The model is fairly general enabling
different aspect of different technology’s’ performance to be modified accordingly.
Nevertheless, there has also been some critique about the inadequate possibilities
to modify the model according to economic and technical trends (e.g. Murmann
and Frenken 2006, Gao et al. 2013, Ernst 1997, Lee and Nakisenovic 1989, Asthana
1995).
Little (1981) presented a technology life-cycle model that is built on strategic
innovation and business planning, a model which is the second studied technology
life-cycle model and has been the foundation of various studies in the area (e.g.
Albert et al. 2015, Gao et al. 2013, Reinders 2006 and Erickson et al. 1990). Based
on the model by Little, technologies convert four times during their life-cycle;
firstly during the concept definition and application formation, known as
embryonic technology; then technologies become pacing technologies that are
going to improve fast over the time; then technologies become key technologies;
and finally they are known as basic technologies. There are different studies that
have tried to describe and develop the life-cycle model in various areas (e.g.
Reinders 2006, Erickson et al. 1990 and Shahmarichatghieh et al. 2015).
Abernathy and Utterback (1978) built a model based on innovative activities
patterns on time basis. Their technology life-cycle consists of three stages based on
the focus areas of innovative activities: performance maximisation, sales
maximisation and cost minimisation. In the beginning they had a very generic
insight on innovative activities while each stage contained different factors and
areas, therefore later studies have modified and developed the model to different
areas and industries (e.g. Boudreau and Lakhani 2015, De Massis et al. 2015).
Accordingly, the model by Ford and Ryan (1981) is mostly related to product
development sourcing strategies by discussing various directions to export the
technological capabilities from the knowledge or technology owner viewpoint. The
model describes strategic and competitive characteristics of the technology in each
stage and provides and analyses patterns for technology owner to sell, licence or
enter other sourcing strategies (Thudium 2015, Krcmar 2015). Ford and Ryan’s
model starts with an idea development stage which is described as the time during
which the technology concept should be defined, then the defined concept should
be developed and transformed into an applicable product in a way that took place
during technology application stage. Besides, finding out the applicability of the
40
technology, the companies must see the cost efficiency, while the uncertainty of
product development activities are less important at this stage. With all the
mentioned considerations, application launch stage starts, and it can be seen as the
counterpart of the performance maximising stage of Abernethy’s and Utterback’s
(1978) technology life-cycle. Subsequently, as the technology performance level is
maximising, the application of the technology products are growing; application
growth stage, which Ford and Rayan (1981) contemplate as being concurrent with
sales maximisation stage of Abernathy’s and Utterback’s (1978) model. Finally the
technology passes into maturity and enters to the degraded stage which is the last
phase of its life-cycle (Ford and Ryan 1981).
Anderson and Tushman (1990) presented a technology discontinuity cycle,
which is the fifth model discussed in this study. The cycle tried to illustrate
innovation and development activities levels and characteristics over time. The
model is a cycle because it considers the next technology appearance at the end of
the current technology life-cycle. The cycle starts with a fermentation era in which
all the technology designers are competing to introduce the most applicable
technology products that have the capability to substitute the previous technology
products. The stage ends when a dominant design by one of the competitors wins,
and an era of incremental design according to the dominant design starts
(Christensen and Rosenbloom 1995). The era of incremental design continues until
the next technology appearance in the industry and market which then follows the
same cycle.
Rogers (2010) represents a diffusion model which tries to categorise the market
area in accordance with each group of customers’ interest in using a technology by
its maturity level. The model is built on the level of market penetration by
technology and introduces five customer groups where their expectation cause
different characteristics of the technology products in each stage of the technology
maturity. Rogers introduced his model for the first time in 1962, later on a
technology adoption life-cycle was presented in accordance with his diffusion
model (Park et al. 2015). This technology adoption life-cycle is the first stage of
Moore (2005) market development model.
Moore (1998, 2002, 2004, 2005, 2011) developed his market development life-
cycle model over many years, studies and publications. As mentioned earlier, the
first stages of his model is the technology adoption life-cycle which means his
model does not consist of the technology concept definition and design phases and
begins with the fist sales of technology product in the market area. Accordingly,
developing the model over a long time by adding real data from various companies
41
in the high-tech has caused the introduction of new concepts such as, the chasm,
bowling alley and tornado. These concepts are based on market behaviour with a
new technology, while Moore introduces some strategies to overcome those
situations. As the model has been developed over time, new studies have been done
based on it and many authors have tried to implement the model and proposed
strategies for both large companies (e.g. Kim et al. 2015, Gudfinnsson et al. 2015)
and small and medium organisations (e.g. Newby et al. 2014).
2.4 Strategy formulating theories
In order to discuss product development sourcing strategies and their situations in
the technology life-cycle three different strategy formulating theories are present in
this dissertation, namely transaction cost theory, knowledge based theory and
resource based theory. The three strategy formulating theories are brought to
improve the robustness of the study and to have a more comprehensive insight into
decision making.
2.4.1 Transaction cost theory (TCT)
Transaction cost theory was developed by Williamson (1983, 1991) from legal and
contracting viewpoint. Apparently, the cost issue is the basic aspect of activities in
any organisation that have the aim of being profitable. Transaction cost theory
categorises all the costs into two groups: production cost which include the costs in
the ideal circumstances and the transaction costs which will be added to production
costs due to any obstacles (Williamson 1991). Apparently, the theory tries to reduce
transaction costs by different tools. Although, critique on TCT has been presented,
including the vast risk of misleading data and related errors (Heide and Weiss 1995),
TCT not considering some obvious obstacles such as product cannibalisation
(Rumelt 1995), TCT not considering the dependency that might be caused by long
term relationships (Williamson 1991), and the model representing sourcing
strategies from a benefit viewpoint.
Transaction cost theory recognises outsourcing as vertical integration, which
can decrease production costs while increasing transaction costs (Coase 2007,
Kogut 1988). Accordingly, TCT defines strategic alliances as hybrid sourcing that
Kogut (1988) argues to upsurge transaction costs in general. Although the general
consideration might not be valid for all the situations, both production cost and
transaction costs should be estimated (Das and Teng 2000). Moreover, Williamson
42
(1983, 1991) present the main factors that affect transaction costs: asset
specificities, frequency and uncertainty. These factors should be included in the
decision making process as well.
2.4.2 Resource based theory (RBT)
In the RBT, all the resources of a company are seen as the tools to remain
competitive in the market area, while the company must fill the gaps between its
own capabilities and the ideal capabilities that are needed for being competitive in
the market area (Grant 1991, Conner and Prahalad 1996, Madhok 1997, Das and
Teng 2000, McIvor 2009). Therefore RBT considers the competitiveness of the
company under both external and internal resources support (Nyberg et al. 2014,
Proctor 2014). As RBT takes a crucial credit for resources, the resources can be
classified by their characteristics and strategic roles, for instance Wernerfelt (1984)
named an indicator factors as: rarity of the resource, substitutability, resource
position barriers, and attractive resources.
Strategic acquisition can be seen as a means to add another company resources
or achievements into ones company to benefit it (Eisenhardt and Schoonhoven
1996). Accordingly, Wernerfelt (1984) considered strategic acquisition as a solution
to gain or trade non-obtainable resources in the market area. Also, other authors
name incentives for strategic acquisition strategy from resource based viewpoint,
for instance business expansion, acquiring customers, or brand name (Yip 1982,
Oster 1990, Stettner and Lavie 2014).
Partnerships and alliance collaborations are seen beneficial when the
capabilities or assets are not internalised and internalising them is not strategically
beneficial or efficient (Madhok 1997). Moreover, product development within an
alliance can reduce time to market and increase internal capabilities (Madhok 1997,
Eisenhardt and Schoonhoven 1996). Hence, six factors which can be seen and
measured to decide based on RBT are: resource heterogeneity, rarity, imitability,
sustainability, expose limit, and imperfect resource mobility. Each of these factors
try to define the situation of the company, it suppliers and the market circumstances
(Peteraf 1993, Grant 1991). On the other hand Barney (1991) introduces factors
that imply strategic role of resources: valuable, rare, not imitable, not substitutable,
while some other models are defined for specific industry or market areas
accordingly (e.g. Ghapanchi et al. 2014).
43
2.4.3 Knowledge based theory (KBT)
KBT considers knowledge as part of company assets such as other tangible assets
and view them as the most significant assets of any company on which the
companies can build its competencies based on the knowledge and compete
accordingly in the market area (Sveiby 2001, Grant 1996, Malmberg and Maskell
2002). Therefore, definition of KBT for sourcing product development is
formulated as: the transformation of knowledge either from internal resources or
external organisations into an added value product (Allee 2000), although the
transformation does not influence the resource ownership (Sveiby 2001). Therefore,
based on KBT the knowledge is seen as an asset like any other documented assets
which should be mapped in the most optimised way to add value, moreover the
boundaries of the company can be built accordingly (Grant 1996).
Outsourcing have been seen positively from KBT viewpoint by different
researchers (Chen et al. 2011, Chen et al. 2009, Chesbrough et al. 2006, Laursen
and Salter 2006, Zhang et al. 2009, Cohen and Levinthal 1990, Afuah 2001,
Rothaermel and Deeds 2006, Ahmadjian and Lincoln 2001). Although opportunism
should be seen as a hazard of the whole process (Handley and Angst 2015,
Bhattacharya et al. 2015). Hence, many studies emphasise the overlap of KBT and
TCT in the sourcing strategy selection area. The results show that gaining external
knowledge can cause cost reductions in the adding value network (Mitchell and
Parmigiani 2009, Rothaermel and Deeds 2006).
Additionally, knowledge acquisition can be a significant factor for strategic
acquisition (Ferriera et al. 2014), especially at the time when a critical know-how
for the market is missed internally and internal learning can be expensive and timely,
therefore strategic acquisition (Ferriera et al. 2014) or strategic alliances can let the
company gain the needed knowledge easier and cheaper (Hagedoorn 1993,
Rothaermel and Deeds 2004, Wei et al. 2000, George et al. 2002, Patzelt et al.
2008).
Grant (1996) presents five factors to evaluate knowledge transfer via any
sourcing strategy, including transferability, capacity for knowledge aggregation,
appropriability, production and limitation in acquisition of knowledge and
production. While Bierly and Chakrabarti (1996) introduce other factors from an
extensive study in knowledge creation process in the pharmaceutical industry in the
US, including R&D intensity, science linkage, knowledge dispersion, technology
cycle time, learning radicalness.
44
2.5 Product development activities evaluation models
2.5.1 Core-context
Mapping product development activities and product development sourcing based
on core-context matrix can give companies a more organised structure for strategy.
Moore (1998) came up with the core-context four-square matrix which has been
later used for defining strategies by many people (e. g. Hoverstadt 2011). The core-
context model tries to define investments or resource allocations on product
development based on strategic situations. Accordingly, any new innovation is core
and the rest are context. Vertically, the matrix is divided into mission critical and
enablers, where mission critical are the product technologies that if lost, the
company would be in trouble. The rest of product technologies are seen as enablers.
In order to build a unified structure, Figure 4 illustrates the position of core-
context matrix in technology life-cycle. The product technology in the beginning is
in core-enabler section, the product technology will make a differentiation but it is
not mission critical because it is not in the market yet and nobody considers the
loss of an R&D project in the market area. After the first launch, the product
technology is still different and new to the market while as it is now introduced to
the market, the possible failure can be a failure in all the investments on R&D and
therefore it becomes mission critical. The competitors get to known about it and try
to compete, though the company strategy is developing and innovating to make
more applicable and reliable products. Accordingly, the potential of innovations
gets lower in quantity and the product technology becomes familiar for customers,
the product enters the maturity phase hence it is still mission critical but in context
section. The company should manage risks and resources and strategies such as
modularisation, standardisation and outsourcing which can be beneficial when the
company have to allocate resources to new product technologies. In the next stage
the company can enjoy the cash cow situation while allocating more resources to
newer technologies and trying to plan for efficient ramp down of the current
technology products (Go 2007, Moore 2000, Barlow and Lane 2007, Swanson and
Morison 2010).
45
Fig. 4. Core-context matrix modification with technology life-cycle.
2.5.2 Boston consulting group matrix
BCG matrix was invented by Boston consulting group in the 1970’s to give a
structure for investment allocations in companies in accordance with the market
situations (Hambrick et al. 1982). The matrix, basically estimate the products
situation in the market via two variations: market growth and market share of the
company (Thaompson et al. 2008). In this study the BCG matrix is tried to modify
according to the technology life-cycle stages and their characteristics, Figure 5 as
the BCG is a market based matrix, it starts after the first launch of the product to
the market. Hence, there is no any known situations for embryonic phase, though
in the introduction phase as the market growth is getting high while the market
share is low, the product technology is in the question mark situation. Although the
intention of the companies is transform technologies into a star situation, which
46
means high market share with high market growth. There is risk of getting stuck in
the question mark area. Accordingly, when the technology gets mature, market
growth rate is flattening and the competition is getting high, therefore the ideal
transition would be going from star into cash cow. However, there is a risk of
transition into dog situation by losing market share to competitors. Consequently,
in the decline phase the companies’ intention is to enjoy their cash cow situation
for as long as possible and move into the dog situation as rarely as possible.
Fig. 5. BCG matrix modification with technology life-cycle.
2.6 Theory synthesis
Product development sourcing strategies are influenced by the level of integration
whereas: outsourcing, strategic alliances and strategic company acquisition all are
suitable, but for different situations. The analysed strategies are defined and the
47
characteristics of each strategy are described with the considerations of varying
situations. The three strategy formulating theories of transaction cost theory,
resource based theory and knowledge based theory are discussed to provide support
for considering different situations and the prevailing needs. Each product
development sourcing strategy can be considered based on these strategy
formulating theories. Evaluating product development activities further provide
support for laying the foundation for assessing the suitability of sourcing for
situations with varying technological maturities. Three models of Core-context,
BCG and technology life-cycle are considered for this purpose. The main key
concepts of the literature review with their main references are presented in Table
3.
Table 3. Main theories.
Topic Key concept Main references
Product development sourcing
strategies:
Outsourcing external sources for implication,
process and sourcing of
innovation
Suarez-villa and Rama 1996,
Rothaermel and Deeds 2006,
Cohen and Levinthal 1990, Afuah
2001, McGrath and McMillan
2000, Gupta and Polonsky 2014,
Masten et al. 1991, Monteverde
1995, Afuah 2001, Leiblein and
Miller 2003, Rothaermel and
Deeds 2006, Spithoven and
Teirlinck 2015
Strategic Alliances Sharing outcome of shared
resourced innovative activities
Chiesa and Manzini 1998, Gulati
1995, Parkhe 1993, Young-Ybarra
and Wiersema 1999, Olk and
Young 1997
Strategic company acquisition Merging a company to acquire its
knowledge, business or monetary
values
Harrison et al. 1991, Oster 1990,
Zenjan 1990, Wilson 1980,
Hennart and Raddy 1997, Stettner
and Lavie 2014
Strategy formulating theories
Transaction cost Theory Deciding based on reducing total
costs which is the combination of
transaction costs and production
costs
Williamson 1983, 1991, Coase
2007, Kogut 1988
48
Topic Key concept Main references
Knowledge Based Theory The most significant asset of any
company is knowledge which the
company can build its
competencies based on and
compete in the market area
Sveiby 2001, Grant 1996,
Malmberg and Maskell 2002
Resource Based Theory All the resources of the company
are seen as the tool to keep being
competitive in the market area,
while the company must feel the
gaps between its own capabilities
and the capabilities which cause it
to be the leader of the whole
market area
Conner and Prahalad 1996, Grant
1991, Madhok 1997, Das and
Teng 2000, McIvor 2009
Product Development Activities &
evaluation Models
Core-context Strategic decisions based on the
situation in core, context, mission
critical and enablers matrix
Moore 1998 and 2002
BCG Strategic situation of the product
technology based on market
growth and market share
Boston consulting Group 1970
Technology Life-Cycle The pattern of one or more factors
of technology over time
Ford and Ryan 1981, Abernathy
and Utterback 1978, Anderson
and Tushman 1990, Little 1981,
Erickson et al. 1990, Achilladelis
1993, Achilladelis et al. 1990,
Watts and Porter 1997, Khalil
2000, Linden and Fenn 2003,
Rogers 2010, Moore and
Adamson 2011, Routley et al.
2013
49
3 Research findings
3.1 Product development sourcing
The first article answers research question 1. The article compares product
development sourcing with those of manufacturing and services. Product
development in this context contains both tangible and intangible aspects, services
intangible and manufacturing tangible outcomes.
In the first article manufacturing, services and product development supply
chains are seen as systems which should process inputs to produce outputs while
using proper sourcing strategies. Therefore, inputs and outputs of each system are
compared in Table 4.
The three sourcing systems are compared with each other from the perspectives
of quality, cost, flexibility, competitiveness and resource utilisation. Product
development inputs and outputs are considered almost the same as manufacturing
and services sourcing systems, while the knowledge plays a more crucial role in
product development sourcing than in manufacturing and services sourcing
systems.
The structure and requirements for quality assurance are important to be built
during the early phases of product development activities, although they might be
partially available in the system. The quality system should be defined during the
process of building a new products, hence, the quality concept is known in sourcing
systems of manufacturing and services. The absence of quality requirements in
product development sourcing systems could increase the uncertainty of the system.
Cost efficiency is another important consideration for sourcing, which however,
is more difficult to identify and define in product development compared to
services and manufacturing. The end result of product development activities can
be vague, while the market condition at the time of product introduction is difficult
to estimate. Therefore, the costs of most of the product development activities are
estimated by using special methods and procedures in different levels of their
inspection, while cost estimation in services and manufacturing is easier and more
reliable.
The definition of flexibility in product development sourcing systems is
completely different compared to services and manufacturing, besides maintaining
high flexibility can be difficult due to the uncertainties of product development
activities. In product development, the flexibility can be defined on project basis,
50
while in manufacturing and services flexibility has more concrete definitions,
mostly based on supply chain efficacy, integration flexibility, compatibility or such
more definite areas.
In fact, product development can be seen as a tool for increasing
competitiveness, while choosing the right product development activities in the
right time, together with the right sourcing strategies can make a company more
competitive. Although, the allocation of all the mentioned right activities is
dependent on the knowledge capabilities and organisational know-how. In
manufacturing and services, competitiveness can be built on either better quality,
cheaper prices, or both, factors that are highly dependent on resource allocation and
strategies of the companies.
As a summary, the first article is about product development sourcing based on
a literature review to clarify some of the most generic characteristics of product
development sourcing.
Table 4. Comparison of product development sourcing with manufacturing and
services sourcing.
Manufacturing Service R&D
Input
Capital, material, know-
how, and labor
Capital, material, know-
how; the role of labor could
be more crucial
Crucial role of knowledge
and information in addition to
manufacturing and service
inputs
Output Finished products,
physical or monetary
value (like software)
Activities by personnel are
given to customers
new or developed product,
process, or activity
Quality Specified in the design of
the product or known
through quality
management
approaches; the unified
approach for the entire
supply chain is more
efficient
Known from customer
perceptions and customer
expectations and service
quality control approaches
like SERVQUAL
Quality of concepts should
be evaluated by company
policies and market
conditions; the R&D process
should include modified
quality control methods
Cost Cost reduction by
efficient production,
distribution, inventory,
and optimization of the
entire supply chain
Cheap labor, geographic
allocation, and
technological equipment
could reduce costs
Depends on the contract and
strategies’ concept and its
revenue, which is estimated
by some methods before and
after the beginning of the
project
51
Manufacturing Service R&D
Flexibility Volume, delivery, mix,
new product, range
response, flexibilities;
methods like JIT or other
strategies such as
outsourcing could
promote it
By allocating human factor
and accurate capacity
forecasting try to increase
flexibility
Flexibility of the R&D project
can be assured by continued
evaluation of the project and
market situation to continue,
modify ,or abandon the
project and avoid additional
losses
Competitiveness Best quality or best price
or combination of both,
which gain by knowledge
and equipment.
More innovative, cheaper
services, total customer
solution, better employee
behavior
Technological capabilities,
internal infrastructure, and
know-how, customer
potential and actual needs
and market situation
Resource
Utilization
Utilization capacity
should be synchronized
with the production
capacity, human factors,
and material; resource
planning with ERP and
MPS databases
Utilization capacity
calculated with special
recognition of the human
factor potential; resource
manufacturing planning
methods are modified for
services
Projects should be prioritized
according to the company’s
strategy; resource planning
can be done by shifting or
eliminating some project
which company does not
have enough resources for
them.
3.2 Technology life-cycle
Technology life-cycle (TLC) is another foundation of this dissertation. The second
article answers the research question 2. Technology life-cycle concept involves
some controversy due to its similarity to other life-cycles. Hence, the second article
attempts to first define technology life-cycle and then compare it with other two
life-cycles, namely product life-cycle and market development life-cycle.
Product life-cycle is seen as the fluctuation of a single products sales from the
beginning of its creation until the last phase of its ramp down. Accordingly, market
development life-cycle shows the market behaviour from the first emergence of a
product into the market until the end of its ramp down, besides the customer groups
and their demographics in each stage. There are three reason for choosing product
life-cycle and market development life-cycle for comparison with TLC; Firstly,
product life-cycle is the most basic life-cycle, hence defining the concept can ease
defining the technology life-cycle concept. Secondly, although product life-cycle
is has similarities to technology life-cycle, it can be important to address the
differences to emphasise their true benefits. Thirdly, market development life-cycle
52
is based on technology appearance in the market area, therefore not only market
behaviour is covered with technology based maturity levels, but also the direction
that a technology needs to go in the market. Therefore, it can be beneficial to
analyse market development life-cycle for the benefit of product development
sourcing decision making.
The article selects seven different technology life-cycle models in accordance with
their relevance to product development area to better illustrate technology life-
cycle phases (Figure 6). The technology life-cycle phases are introduced from
different viewpoints to merge their stages based on the definition of each phase in
each technology life-cycle. Regardless of the borders not being concrete and them
floating in some sense, an array of characteristics can be identified for each stage
of technology life-cycle.
In fact, the entire dissertation utilises the five phase generic technology life-cycle,
while the characteristics of the matched stages from other technology life-cycles
are considered.
53
Fig
. 6. S
ev
en
te
ch
no
log
y l
ife
-cy
cle
mo
de
ls.
54
3.3 Product development activities over technology life-cycles in
different generations
The third article answers the research question 3. The article studies Product
development activities over technology life-cycle (TLC) phases. The research
question has been studied analysing the product development focus areas in the
case company within four in different technology generations (Figure 7). Product
development activities are mapped over technology life-cycles to create structure
and to classify product development activities to reveal trends, besides collecting
descriptive targets for product development activities. Hence, product development
activities are classified based focus areas in terms of performance maximisation,
cost reduction and customisation during TLCs.
55
Fig
. 7. F
ocu
s o
f th
e p
rod
uc
t d
ev
elo
pm
en
t a
cti
vit
ies
wit
hin
fo
ur
dif
fere
nt
tech
no
log
y g
en
era
tio
ns o
ve
r fi
ve
te
ch
no
log
y lif
e-c
yc
le.
56
Product development activities within four different technology generations have
specific focus areas over technology life-cycle phases.
Table 5 provides indications on how performance maximisation, cost reduction
and customisation may be in the focus of product development over TL C phases
according to earlier research.
57
Ta
ble
5. F
ocu
s o
f p
rod
uc
t d
eve
lop
men
t a
cti
vit
ies b
etw
ee
n p
erf
orm
an
ce
ma
xim
isa
tio
n,
co
st
red
ucti
on
, an
d c
usto
mis
ati
on
wit
hin
tec
hn
olo
gy
lif
e-c
yc
le p
ha
se
s a
cc
ord
ing
to
ea
rlie
r re
searc
h
Act
iviti
es
type o
f
Pro
duct
Deve
lopm
ent
Intr
oduct
ion
Gro
wt
h I
Gap
G
row
th II
Matu
rity
D
ecl
ine
Pro
du
ct
Deve
lopm
ent
Pe
rfo
rma
n
ce
Maxi
mis
ati
on
Imp
ort
an
t ta
sk f
or
the s
tage (
O’R
eill
y
and T
ush
man
2013),
while
there
is n
o p
roduct
s in
the
be
gin
nin
g (
Fo
rd
and R
yan 1
981).
Th
e c
rea
ted
applic
atio
ns
and
pro
du
cts
are
diff
icult
to u
se
(Lin
den a
nd F
enn
20
03
), m
ore
ove
r
no s
tandard
s or
pro
cess
es
exi
st
(Ab
ern
ath
y a
nd
Utterb
ack
19
78)
New
tech
nolo
gy
perf
orm
ance
leve
l is
low
(Alb
ert
et
al.
20
15
;
Christ
ense
n e
t al.
2001)
In the b
egin
nin
g w
hen
the p
roduct
s fu
nct
ionalit
y
is n
ot id
ea
l, co
mpa
nie
s
com
pete
on the
perf
orm
ance
leve
l
(Christ
ense
n e
t al.
2001)
Not pro
ven
tech
nolo
gy
(Ford
and
Rya
n 1
981)
Busi
ness
ris
k,
identif
icatio
n o
f
com
petit
ors
, and lo
w
cust
om
er
satis
fact
ion
due to lo
w
perf
orm
ance
leve
l of
the tech
nolo
gy
(Ast
ha
na
19
95
)
As
pro
duce
rs a
nd
use
rs g
ain
exp
erience
, th
e
unce
rtain
ty
decr
ease
s, w
hile
eve
n a
t th
is p
oin
t
tech
nolo
gy
pe
rfo
rma
nce
impro
vem
ent
should
be e
vident
to the c
ust
om
ers
and h
igh
perf
orm
ance
could
be a
com
petit
ive
stra
tegy
(Ab
ern
ath
y a
nd
Utterb
ack
19
78,
Pra
jog
o 2
01
6)
Tech
nolo
gy
perf
orm
ance
leve
l
is a
ccepta
ble
and
const
ant w
hile
the
com
petit
ion g
oes
thro
ugh c
ost
and
cust
om
isatio
n
(Alb
ert
et
al.
2015,
Christ
ense
n
19
92
)
The p
erf
orm
ance
leve
ls
are
the h
ighest
, a
nd
perf
orm
ance
capa
city
ha
s b
ee
n r
ea
che
d (
Fo
rd
and R
yan 1
981).
The p
roce
ss e
ffic
iency
and p
roduct
ivity
goes
hig
h b
ut fle
xibili
ty a
nd
innova
tion g
oes
dow
n
(Ab
ern
ath
y a
nd
Utterb
ack
19
78)
58
Act
iviti
es
type o
f
Pro
duct
Deve
lopm
ent
Intr
oduct
ion
Gro
wt
h I
Gap
G
row
th II
Matu
rity
D
ecl
ine
C
ost
Reduct
ion
The c
ritic
al t
arg
et
in the s
tage is
findin
g o
ut b
est
perf
orm
ance
while
cost
effic
iency
is
imp
ort
an
t fo
r
cross
ing the c
hasm
(Mo
ore
20
02
, F
ord
and R
yan 1
981)
though it
is n
ot
take
n a
s im
port
ant
as
pe
rfo
rma
nce
cre
atio
n (
Alb
ert
et
al.
2015)
Cost
reduct
ion p
riority
in
gro
wth
sta
ge is
low
er
tha
n p
erf
orm
an
ce
maxi
mis
atio
n A
lbe
rt e
t
al.
(20
15
).
Th
e s
tan
da
rds
are
cre
ate
d t
o e
ase
Pro
du
ct
Deve
lopm
ent (F
en
n a
nd
Lin
den 2
003).
In the b
egin
nin
g c
ost
is
not th
e p
riority
of a
ny
new
adopte
r cu
sto
mer
gro
ups,
they
dem
and
only
for
new
tech
nolo
gie
s w
ith t
he
best
perf
orm
ance
leve
l
to m
ake
a d
iffere
nce
(Mo
ore
20
02
)
At th
is p
oin
t th
e n
ew
tech
nolo
gy
is n
ot o
nly
unre
liable
but als
o
exp
ensi
ve (
Ford
and
Rya
n 1
981).
This
, eve
n if
th
e
tech
nolo
gy
itself
has
reaso
nable
pri
ce d
ue
to h
igh u
nce
rta
inty
and r
ela
ted c
ost
s of
infr
ast
ruct
ure
. (P
ark
et
al.
2015).
The p
ragm
atis
ts d
o
no
t te
nd
to
en
ter
to
the
ma
rke
t (M
oo
re
20
02
)
The c
ost
reduct
ion
is the targ
et in
th
is
sta
ge
. (M
oo
re
19
98
)
More
tech
nolo
gy
applic
atio
ns
and
standard
isatio
n a
re
the p
roduct
deve
lopm
ent
stra
tegie
s here
(Ford
and R
yan
19
81
, A
lbe
rt e
t a
l.
2015, H
aupt
et al.
20
07
, F
ord
an
d
Rya
n 1
981,
Vill
alb
a-D
iez
and
Ord
iere
s-M
ere
20
15
).
Abern
ath
y and
Utterb
ack
, (1
978)
call
this
sta
ge c
ost
reduct
ion s
tag
e.
O’R
eill
y a
nd
Tu
shm
an
, (2
01
3)
arg
ue
th
at
the
com
petit
ion is
basi
cally
again
st
price
in this
sta
ge
The k
now
n
stra
tegy
in this
mark
et si
tuatio
n is
Whole
Pro
duct
+1,
where
the “
+1”
can b
e c
ost
(Mo
ore
19
98
).
The c
ust
om
ers
exp
ect
com
ple
te
pro
duct
with
cheap p
rice
s, the
refe
ren
ce o
f th
e
price
is n
ot
indust
ry le
ader
but th
e follo
wers
(Mo
ore
et
al.
1998, L
ilisc
hki
s,
20
13
)
Cost
reduct
ion is
the
ulti
mate
exp
ect
atio
n o
f
the la
ggard
s an
d
conse
rvativ
es
(Mo
ore
20
02
)
59
Act
iviti
es
type o
f
Pro
duct
Deve
lopm
ent
Intr
oduct
ion
Gro
wt
h I
Gap
G
row
th II
Matu
rity
D
ecl
ine
C
ust
om
isat
ion
Cust
om
isatio
n
poss
ible
with
tw
o
targ
ets
:
Sponso
rship
, by
big
com
panie
s fo
r
small
start
-ups
make
the b
enefic
ial
ideas
com
e o
ut
(Lin
den a
nd F
enn
2003, O
’Reill
y and
Tu
shm
an
20
13
).
Pio
neering:
big
com
panie
s ask
to
have
alli
es
with
th
e
deve
loper
com
pany
to b
e
pio
neer
in it
s ow
n
ind
ust
ry (
Mo
ore
20
02
).
Gro
wth
Mark
et
cust
om
isatio
n w
ill b
e
done m
ost
ly f
or
the
nic
he b
uye
rs.
The c
ust
om
er
feed
back
can m
ap the s
trate
gic
deve
lopm
ent
and r
epair
the
bu
gs
(Mo
ore
20
02
).
Mass
cust
om
isatio
n is
the s
trate
gy
that ca
n a
dd
valu
e a
t th
is s
tage
(Muelle
r ‐H
eum
ann
1992,
Sh
oh
am
an
d P
au
n
20
15
)
Cust
om
isatio
n is
the
next
com
petit
ive
stra
tegy
if th
e
tech
nolo
gy
perf
orm
ance
gets
relia
ble
(C
hri
stense
n
et al.
2001)
Se
gm
en
tatio
n a
nd
cust
om
isatio
n a
solu
tion to c
ross
th
e
cha
sm (
Mo
ore
20
04
)
Rece
ntly
Kita
jima
(2015)
studie
d
succ
ess
of
cust
om
isatio
n in
3D
prin
ter
ma
rke
t.
Segm
enta
tion is
the s
trate
gy
to
cross
the c
ha
sm
and b
egin
to
pe
ne
tra
te t
he
gro
wth
ma
rke
t
(Mo
ore
20
02
,
19
98
).S
tan
da
rdis
ati
on a
nd p
roce
ss
impro
vem
ent
in t
he
late
gro
wth
sta
ge
when the
tech
nolo
gy
goes
into
To
rna
do
wa
ters
he
d (
Mo
ore
19
98
)A
contr
ove
rsia
l are
a
(Cedill
o-C
am
pos
and
Sánch
ez-
Ram
írez
2013)
Sm
art
cust
om
isatio
n in
gro
wth
ma
rke
t
(Oliv
er
et
al.
20
04)
Cust
om
isatio
n,
mass
cust
om
isatio
n a
nd
segm
enta
tion a
re
know
n a
nd h
ighly
reco
mm
en
de
d
stra
tegie
s in
matu
rity
sta
ge
(Pa
rris
h e
t a
l.
2006, C
edill
o-
Cam
pos
Sá
nch
ez-
Ra
mír
ez
2013, T
seng a
nd
Hu 2
014)
Cust
om
isatio
n for
big
ger
cust
om
ers
(Utterb
ack
1996)
60
The priority of the technology performance related product development
activities is on the highest level within technology life-cycle phases 1-4, until the
maturity technology life-cycle phase, and starts decreasing at the end of maturity
life-cycle phase. The focus of the cost reduction activities at phases 1and 2 are low
until raise takes place at life-cycle phase 3 (growth 2/tornado life-cycle phase). Cost
reduction focus stays on the highest level within the last two life-cycle phases
(maturity and decline). The focus for customisation raises at phase 3 due to the high
level of maturity at this stage. Customisation decreases to zero at declining/aging
technology life-cycle phase. These trends can be seen evident based on both earlier
research and the empirical study.
Indeed, the first priority of any company in the beginning of any technology
emergence is maximising technology performance to produce as much applicable
products as possible. Although, when a company gains proper knowledge and
maximises the performance to an acceptable level, business is attempted to build
based on the technology. Building a technology based business will require more
reasonable prices, hence cost issues will require a more significant level of focus.
When a technology gets mature, there are numerous competitors in the market
area, ones who can provide products with almost the same performance level,
therefore introducing a whole product+1 will become the aim of product
development activities while producing more cost efficient products or product
categories. One of the technology life-cycle stages particularly considered in this
dissertation is the Chasm watershed. The chasm is allocated approximately in the
middle of the introduction stage when a company has started its sales already, but
before any big sales, while even might have stopped selling for a specific duration
of time. Companies try their best to avoid the chasm or at least shorten the duration.
Three reasons identified in this study for being trapped in the chasm: expensive
price, unreliable technology, or the lack of integration with end users producers.
The considered solutions for passing the chasm identified in the study include:
having an ally with end user devices producers, and integrating a new technology
and old technology into a single product. Also, allocating cost reduction strategies
in product development activities focus areas from the very beginning might prove
beneficial.
61
3.4 Product development sourcing strategies over technology life-
cycle phases
The fourth article answers the research question 4. The article analyses product
development sourcing strategies under three strategy formulating theories of
transaction cost theory (TCT), knowledge based theory (KBT), and resource based
theory (RBT) over technology life-cycle phases. Three sourcing strategies,
including outsourcing, strategic acquisitions, and strategic alliances are considered
based on the level of integration. The strategy formulating theories are utilised to
evaluate the product development sourcing strategies (Table7).
Table 6. Product development sourcing strategies (outsourcing, strategic alliances and
strategic company acquisition) defined under three strategy formulating theories
(Transaction cost theory, knowledge based theory, and resource based theory).
Theories Essence of the
theory
Outsourcing Alliances Acquisitions
Transaction Cost
Theory
Lowest possible
production cost and
transaction cost
(Kogut 1988,
Williamson 1985)
Maximise
production cost,
minimise
transaction cost
(Das and Teng
2000) while they
depend highly on
other factors such
as asset specificity
(McIvor 2009)
Medium level of
transaction and
production costs
(Gulati 1995, Das
and Teng 2000)
In case of high
uncertainty and
asset specificity
(Kogut 1988)
Production costs
are lower but
transaction costs
can be high in
accordance with
uncertainty, and
asset specificity
(Kogut 1988)
62
Theories Essence of the
theory
Outsourcing Alliances Acquisitions
Knowledge Based
Theory
Knowledge and
capabilities of a
company should be
maximised to have
sustainable
competitiveness
and best
performance
(Sveiby 2001)
Outsourcing can
increase knowledge
capabilities of a
company
(Rothaermel and
Deeds 2006, Cohen
and Levinthal 1990,
Afuah 2001,
McGrath and
McMillan 2000,
Gupta and Polonsky
2014) while
opportunism should
be seen (Handley
and Angst 2014,
Bhattacharya et al.
2015)
The critical
knowledge is not
inside the company
completely or
partially, and
knowledge is
complex, and while
developing it
internally is time
consuming and
expensive
(Hagedoorn 1993,
Rothaermel and
Deeds 2006, Wei et
al. 2000, George et
al. 2002, Patzelt et
al. 2008)
Knowledge
acquisition can be a
known reason for
strategic company
acquisitions
(Ferriera et al.
2014)
Resource Based
theory
Adding value by
adding external
superior resources
(Madhok 1997, Das
and Teng 2000)
Outsourcing can
reinforce internal
capabilities and
competitive
advantage (Coates
and McDermott
2002)
Important
capabilities are not
inside the company
and gaining them
via internal
capabilities is timely
and costly (Madhok
1997)
There is an
enormous amount
of capabilities that
are needed or the
market for acquired
company is vast
(Eisenhardt and
Schoonhoven
1996). Acquisition is
a beneficial bargain
to benefit of the
acquired market in
terms of customer
and other assets
like brand name
(Yip 1982, Oster
1990, Stettner and
Lavie 2014)
Product development sourcing strategy decisions can be made based on the three
strategy formulating theories, while priority and different factors of each theory is
discussed in different technology life-cycle phases and for each product
63
development sourcing strategy (Figure 8). In fact the characteristics of each
technology life-cycle phase is seen as a feed for making decision via the theories.
Fig. 8. Product development activities along TLC with the priority of each sourcing
strategy based on the strategy formulating theories.
64
The importance of knowledge acquisition in the beginning of technology life-cycle
is quite bold in sourcing decision making, although later on when the competition
has achieved the technology knowhow and technologies are more mature cost
reduction will be more crucial and influence the sourcing strategies.
According to earlier research the three strategy formulating indicate that
sometimes two or all three theories correspond on one or two sourcing strategies
for a TLC stage. For example, in the introduction stage, knowledge capabilities are
seen as an important issue by knowledge based theory and resource based theory
in addition to the fact that acquiring knowledge via partnerships is seen cheaper
and faster in the transaction cost theory. Figure 9 illustrates the trend of sourcing
strategies as a part of technology lifecycle for three technology generations A. B
and C in the case company.
All strategy formulation theories (TCT, KBT and RBT) were utilised successfully
by the analysed case company. The case company has mainly developed their
technologies and products based on internal product development capabilities
instead of the very early phase of the first, technology A, generation development.
Since that the product development sourcing has been on the level of 10-30% of
total effort. The most common product development sourcing strategy has been
outsourcing followed by alliances and acquisitions. The company has also made
major acquisitions due to market share growth targets, not due to major lack of
product development capabilities.
65
Fig. 9. Trend of sourcing strategies as a part of a technology life-cycle in the studied
case company.
3.5 Product development sourcing strategies decision making
model
The final article 5 answers the research question 5. The article attempts to provide
a decision making model on company relationships with external players by
product development sourcing. The created decision making flowchart has two
main parts, identification of product development activities and product
development sourcing strategy evaluation (Figure 10).
For the purpose of identifying product development activities, strategic-
nonstrategic, core-context, and BCG matrices were considered in addition to
technology life-cycle, to evaluate product development activities more clearly. The
product development activities would be investigated under the three strategy
formulating theories to find out the best product development sourcing strategy.
66
The article shows that the strategic role and allocation in core context and BCG
matrices change over time by the different technology life-cycles. The company
product development investments in different stages of technology life-cycle are
different. Therefore not only can suitable product development sourcing strategies
vary, but so can also the significance of related strategy formulating theories. The
most apparent requirement change however, is the level of prioritisation of cost
over knowledge.
Fig. 10. Product Development sourcing strategies decision making flowchart.
The above introduced flowchart corresponds to two decision making trees (Figure
10 and 11) Figure 11 contains a decision tree for product development activities
and Figure 12 presents a decision tree for the second part of the flow chart which
67
attempts to evaluate product development sourcing strategies. The concepts are
described further in appendix 1
Fig. 11. Product development activities evaluation decision tree.
68
Fig. 12. Product development sourcing strategies decision tree (The brought concepts
are described in appendix 1)
3.6 Results synthesis
The research problem for this dissertation was divided into five research questions
that are attempted to answer via five individual articles. Product development
sourcing and the technology life-cycle concept are studied as the foundation of the
entire dissertation in the first, second and also partially in the third article. Product
69
development activities are mapped accordingly in the third article (section 3.3)
while article 4 tries to allocate three product development sourcing strategies:
outsourcing, strategic alliances and strategic company acquisition on the
technology life-cycle platform (section 3.4). Finally, all the studied concepts and
findings are included in a decision making model in the 5th article (section 3.5).
Overall, this dissertation introduces a decision making model for assessing different
product development sourcing strategies based on technology maturity levels and
technology life-cycle stages.
As a mandatory enabler for the competitiveness of a company, the focus and
content of the technology and product development activities should lead to
competitive productisation of new products at the right time, at a right cost and at
the right quality from the market life-cycle viewpoint. The alignment of the
technology life-cycle with product life-cycle and market development life-cycle is
a challenging management topic due to uncertainty of the market readiness for new
technological innovations. The best technological innovations can create totally
new markets, market segments or, at least, new product applications. The early
technology life-cycles can be seen as an iterative process between first viable
products based on the new technology and the marked acceptance.
The technology and product development competencies can be efficiently
extended by using three strategy formulating theories, namely the knowledge based,
resource based and transaction cost theories. At the early technology and product
development life-cycle phases the priority of skilled product development
competencies and knowledge comes before the cost efficiency issues. Indeed, in
knowledge intensive product development process the quality of the competence
of the product development resources is a mandatory factor.
70
Fig. 13. Three dimensional view to analyse the strategic positioning of technology,
product and market development as a core context of the organisation.
Different product development sourcing strategies can increase the competitiveness
of the company by managing critical knowledge of the technology and product
development resources cost efficiently in order to productise the new products.
Especially new technology development might require competencies that are not
available internally. The required competence increase can be implemented by the
simultaneous usage of different types of product development sourcing strategies
such as outsourcing, strategic alliances and strategic acquisitions. The selection of
the most usable sourcing strategy are dependent on the phase of the technology life-
cycle, product life-cycle and marked life-cycle and the existence of the competent
and cost efficient internal resources. In addition, the strategic positioning of the
technology or products impacts the selection.
In order to simplify the overall outcome of this study the higher level principles
could be formed into a three dimensional matrix (Figure 13) including the 1)
technology, product and market life-cycle phases, 2) the strategic positioning of the
technologies, products and markets and 3) type of product development sourcing
strategy (type of resources).
The positioning of the technologies, products and markets can be categorised
as future potential, existing mature and declining type of business. The life-cycle
phases are introduction, growth 1, growth 2, mature and decline. Technology and
product development strategic sourcing strategies can be classified as the usage of
71
existing internal resources, strategic acquisitions, strategic alliances and pure
outsourcing.
As a major outcome of this study, a product development sourcing strategy
framework (PDSF) is proposed for analysing product development sourcing
strategies to support decisions according to strategic positioning of the technologies,
products and markets and based on the related life-cycle phases (Figure 14).
Fig. 14. The product development sourcing strategy framework as three dimensional
view to analyse the strategic positioning of technology, product and market
development as a core context of the organisation.
For the future business competitiveness the most strategic core context
technologies, products and markets, and the related competencies should be seen
strategic, thus the resources should be internal. If internal competencies are not
available the strategic competences can be internalised by the strategic acquisitions.
The strategic alliances can be considered as well but then the future business
opportunities and competitiveness will be shared as well.
The strategic existing mature technologies, products and markets are critical
for the existing business competitiveness, thus the related competencies and
resourcing can still be seen more internal than external. However, the company
might lack of internal resources for the needs of the mature phase. Strategic
acquisition might not be any more the choice for resourcing but strategic alliances
with the companies who are still looking a longer term business opportunities with
mature technologies and products in their focus market areas. The use of strategic
72
alliance resources at a mature phase would release the internal resources for the
needs of future business competitiveness and related technology and product
development.
The outsourcing of product development competencies can be option for
resourcing to maintain the declining technologies and products until the systematic
ramp-down of them have been done. At a declining life-cycle phase, the
technologies, products, markets and related competencies are not anymore strategic,
thus the outsourcing is the more natural choice with a partner that sells the specific
product design and maintenance services.
Indeed, for the future competitiveness at the early phase of the technology,
product and market life-cycle, the product development focus is on the strategic
core context of the organisation, and internal or internalised knowledge and
competencies. Strategic alliances can be seen as the option when moving to
strategically lower level technologies, products and markets and to later more
mature life-cycle phases. At the end of the life-cycle with declining technologies,
products and markets the most obvious choice is to use outsourced product
maintenance resources to release internal resources to more strategic use.
The selection of the product development model is dependent on internal
organisational know-how and knowledge capabilities of the product development
organisation. In addition, the quality, cost, flexibility of product development
concept and resources are critical factors including the competitiveness of the
technological capabilities. The cost efficiency of previous selections need to be
evaluated in each option.
According to the findings of this study, the product development sourcing
strategies can be mapped according to the developed PDSF as technology, product
and market maturity levels by considering the specific needs and motivations of
each prevailing situation. This necessitates the understanding of the characteristics
of different technology life-cycle stages, including not only the defined factors of
technology life-cycle, but also evaluating product development activities. The
evaluation in the context of technology life-cycle concept is possible with models
such as BCG and core-context. The evaluation is useful by these models as they
provide view to factors relative to technology life-cycle. Accordingly, the factors
harvested from technology life-cycles and other models must be organised in order
to decide how the product development sourcing should be organised in specific
situations. The strategy formulating theories provide support for organising the
relevant factors and for further decisions.
73
Table 7 summarises the research contribution of this thesis.
Table 7. Summary of research contribution.
RQ# Result
RQ1 Product development sourcing in comparison with manufacturing and services: important role of
knowledge, high complexity, and high uncertainty, (Table 4)
RQ2 Technology life-cycle stages, competition, necessary knowledge capabilities and such influencing
PD sourcing.
RQ3 Cost reduction focus ascends over technology life-cycle, performance maximisation has a
descending trend over technology life-cycle, and customisation and integration can help the
company to survive from the chasm trap
RQ4 Knowledge acquisition in the beginning of technology life-cycle and latter cost reduction, variation
and integration are the biggest issue in selecting the proper sourcing strategy according to
market factors (Table 6, figure 8 and Figure 9)
RQ5 A flow chart to first evaluate product development activities and to assess product development
sourcing strategies (Figure 10 figure 11, figure 12)
Overall Pointing out how the product development sourcing strategies should be analysed and decided
by the created PDSF according to strategic positioning of the technologies, products and markets
and based on the related life-cycle phases. (Figure 13 & 14).
74
75
4 Discussion
4.1 Conclusions
Mapping product development activities and sourcing strategies over technology
life-cycle is possible by considering several matters three-dimensionally. When
considered in this manner, one dimension includes technology, product and market
life-cycle phases, the other one the strategic positioning of technologies, products
and markets, and the third one the types of product development sourcing strategies.
Technology life-cycle and the related parameters of technology and technology
maturity, relevant to product development can be found based on considering seven
complementary technology life-cycles simultaneously. Accordingly, the
possibilities of product development and product development sourcing strategies
are vital to understand. Product development activities can be considered over
technology life-cycle by the cost minimisation trend and from the perspective of
performance maximisation. In the beginning of technology life-cycle when
technology is still in the embryonic phase and later in the introduction and growth
phases, the cost reduction issue can be the deal breaker, while reliability and
performance capability are the issues that technology products should prove in
order to them to stay on the shelf. Although, in late growth phase, maturity phase
and decline phase, the performance issue is not as big of a deal due to the customers
knowing about the technology and features being added, variation in addition to
cost reduction can absorb a wider range of product development.
Technology maturity has obvious effects on strategic sourcing parameters. The
sourcing strategies can be analysed from the perspective of three strategy
formulating theories. When considering three-dimensionally, it is possible to see
that the decision making parameters in each theory change over technology life-
cycle, which can have a potential effect on decision making over technology life-
cycle. Apparently, product development and sourcing gets more flexible over time
due to the wider variation of companies with adequate knowledge of the technology
in question. Furthermore, uncertainty reduces over time at least due to the situation
surrounding the technology getting more constant across the market area. Therefore,
technology life-cycle has a big effect from the perspective of transaction cost theory
parameters.
On the other hand, as the technology passes by the life-cycle, the rarity of
resources reduces along the degree of the resource competitiveness. Additionally,
76
imitation and substitution becomes easier by the time as the technology maturity is
increasing, therefore product development sourcing strategies change over time
from resource based theory perspective as well.
Finally, knowledge is the most crucial resource of product development
sourcing, some parameters such as appropriate-ability, capacity of aggregation and
limitation of knowledge acquisition are increasing as the technology is passing
through technology maturity phases. Therefore, product development sourcing
strategies change over technology life-cycle based on knowledge based theory
perspective as well.
Accordingly, as mentioned along the market change over technology life, some
other models such as BCG, and core-context have trends in their parameters. Beside
the fact that there is some interrelation among the products of a company, the size
of the organisation, other factors can also affect the sourcing strategies together
with companies’ relationship with their ecosystems. Hence, in short, the product
development sourcing strategies can be mapped according to technology, product
and market maturity levels by considering the specific needs and motivations of
each prevailing situation.
4.2 Theoretical implications
The research problem is studied through five articles consisting five
complementary viewpoints, the first two discuss the foundations of this study:
technology life-cycle and product development sourcing while the other three focus
on the situations of product development activities and product development
sourcing strategies over technology life-cycle. Table 8 summarises the theoretical
implications of the dissertation including the implications of the whole created and
the individual publications.
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Table 8. Summary of theoretical implications.
Focus Implications
Overall This study indicates how the selection of most
suitable sourcing strategies is dependent on the
phase of technology, product and market life-cycles,
the existence of competitive and cost efficient
internal resources, whilst the strategic positioning of
the technology also impacts the selection. As a
major implication the PDSF has been developed.
Comparison of R&D supply chains and service and
manufacturing supply chains
Better insights on product development sourcing
conditions by comparing product development
sourcing with manufacturing and services sourcing
in cost, quality, flexibility, competitiveness, and
innovations.
Product life-cycle, technology life-cycle and market
life-cycle: similarities, differences and applications
Lighting up the definition and factors of technology
life-cycle by comparing and defining other
controversial life-cycles: product development and
market life-cycle.
Product development activities over technology life-
cycles in different generations
Technology life-cycle structure are built based on
seven technology life-cycles which are related to
product development and product development
activities, concluding the stages, and mapping
product development activities based on the found
structure.
Product Development sourcing over Technology
Life-cycle
According to the characteristics of technology life-
cycle stages product development sourcing
strategies are mapped, including outsourcing,
strategic acquisition, and strategic alliances.
Technologies are evolving - product development
and sourcing changes over technology life-cycle?
Based on the literature and empirical data which are
mapped over technology life-cycle a decision
making flow chart with two sections: product
development activities and product development
sourcing strategies
From the viewpoint of the whole created by the five publications, internal and
external perspectives have been the two main locations of knowledge amongst the
discussion relating to the selection of sourcing strategies, or make or buy decisions
since the early 1900s (e.g. Arrow 1962, Coase 1937). This study is in line with
earlier research on the main locations of knowledge being either internal or external
by indicating that at the early product development and technology life-cycle
phases the knowledge and competence perspectives are emphasised for product
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development, a consideration impacting the sourcing decisions. Nevertheless, this
study provides new to previous research on product development sourcing by
introducing the perspectives of different technology life-cycle stages based on the
created PDSF. This is regardless that some previous studies have somehow
acknowledged technology life-cycles. For example Jones et al. (2001) examined
the relationships between technology life-cycle stage, intellectual property
protection, and internally available resources and external technology acquisition.
The author of this thesis was, however, unable to locate specific studies that would
focus on the impact of technology life-cycle stages on product development
sourcing decisions. Hence, it appears that this study provides original contribution
in this context by addressing the impact of technology life-cycle stages. On the
other hand, this study is in line with studies that acknowledge the level of
technology life-cycle to have an impact on how to optimally and effectively utilise
the company’s skills, resources, and competencies (e.g. Song and Montoya-Weiss
2001).
From the market life-cycle perspective right time, cost and quality have
significance, not the least in the high-teach and IT industries where the rapid
innovation and intense competition are visibly present (e.g. Harter et al. 2000). This
study is in line with these studies by showing the importance of technology and
product development activities for competitiveness, where the activities should
lead into competitive productisation of new products. This study provides
contribution by including three strategy formulating theories as a part of
consideration in this context, namely transaction cost theory, knowledge based
theory and resource based theory. The context of product development and success
factors, such as cost, time, performance, and quality have significance for the
activities at different stages of technology maturity. This type of success factors can
change based on different factors (Eisenhardt and Schoonhoven 1996, Karimi et al.
1996), but a single viewpoint in decision making is not enough. There are numerous
problem solving and strategy formulating models that can potentially help in
assessing the suitability of different success factors. The three theories of
transaction cost, resource based and knowledge based theory are utilised as a
combination in the context of this study, each of which contains a group of factors
and logic that are individually useful, but are not previously studied adequately as
a combination in the context of product development sourcing strategies. Hence,
this study provides new contribution, whilst is also in line with the previous studies
on cost efficiency being fundamental for profitability (Williamson 1991), and on
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companies having to fill the gaps between their own capabilities and the ideal
capabilities that are needed to be competitive in the market area (Grant 1991,
Conner and Prahalad 1996, Madhok 1997, Das and Teng 2000, McIvor 2009), and
that knowledge is an asset that companies can build their competencies on (Sveiby
2001, Grant 1996, Malmberg and Maskell 2002). Knowledge potentially being
particularly important for product development sourcing especially during the early
stages of technology life-cycle.
Knowledge and its integration is well recognised in the context of new product
development (Clark and Fujimoto 1991, Nonaka 1990, Wheelwright and Clark
1992) as well as in sourcing. This study is in line with previous studies on the
importance of knowledge. In general, previous studies have not covered product
development sourcing strategies sufficiently enough in the context of technology
maturity levels, whereas the focus of the studies has been different (e.g. Williamson
1991, 1983). Product development sourcing can increase the competitiveness of a
company by supporting managing critical knowledge of technologies and product
development resources. This study provides new contribution by indicating that
based on the developed PDSF different sourcing strategies of outsourcing, alliances
and acquisitions can potentially be utilised in different competitive situations to
gain suitable knowledge and capabilities. The study indicates that the focus may
need to be different at different technology life-cycle stages and that the sourcing
strategies can be utilised to support the specific needs. The strategic positioning of
the technology may also have significance.
Comparison of R&D supply chains and service and manufacturing supply
chains:
Even though sourcing conditions have previously been studied in the context of
services (e.g. Siegel and Griliches 1992, Lööf and Heshmati 2002, Rosko 2001),
and manufacturing (e.g. Heshmati 2003, Huang et al. 2002), and the particular
focus has been on performance dimensions of quality, cost, flexibility and such.
The product development sourcing in terms of performance dimensions has not
previously been adequately compared to those of manufacturing and services. The
first publication provides contribution by comparing product development sourcing
and that of manufacturing and services in terms of performance dimensions. Even
though analysing performance dimensions in the context of sourcing is by no means
new to the research, the first article provides better insights on product development
sourcing conditions by comparing product development sourcing with
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manufacturing and services sourcing in cost, quality, flexibility, competitiveness,
and innovations.
Product life-cycle, technology life-cycle and market life-cycle: similarities,
differences and applications:
The stages of product life-cycle (e.g. Cox 1967, Klepper 1997, Hofer 1975),
technology life-cycle (e.g. Khalil 2000, Little 1981, Ford and Ryan 1981, Anderson
and Tushman 1990, Rogers 2010, Moore 2004), and market life-cycle (e.g. Roger
2011, Moore 1991, 1995, 1999, 2002) have very many similarities, yet their criteria
of investigation are completely different. These different life-cycles view products
from diverse perspectives. Product life-cycle considers the product sales revenue
over time (e.g. Cox 1967), while technology life-cycle looks at the technology
maturity over time (e.g. Haupt et al. 2007, Khalil 2000), whereas when the
technology becomes mature enough to enter the market it will link to the first stage
of market life-cycle (e.g Moore 1991). This study is in line with the previous studies
in accepting that there can be versatile perspectives to life-cycle considerations, all
of which have their specific benefits. Technology life-cycle is in the main focus of
this study as the technology life-cycle illustrates the trend of important factors of a
technology over the duration that the technology exists (Albert et al. 2015, Khalil
2000). This paper utilises a five phase generic technology life-cycle, where the
characteristics of stages that are matched are considered. This paper provides new
perspectives to previous discussion by considering the diverse factors of
technology life-cycle by comparing against other controversial life-cycles of
product development and market life-cycle.
Product development activities over technology life-cycles in different
generations:
The paper addresses a comprehensive technology life-cycle structure which is a
result of seven technology life-cycle models’ requirements (Khalil 2000, Ford and
Ryan 1981, Abernathy and Utterback 1978, Anderson and Tushman 1990, Little
1981, Rogers 2010 and Moore 2004). All these life-cycles try to organise product
development or product development sourcing strategies. The particular
contribution of this dissertation lies in combining all these technology life-cycle
requirements in a unique single structure.
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Product development focus areas of performance maximisation, cost reduction
and customisation are acknowledged in the previous literature in the context of
technology life-cycle stages to a certain extent, but are not considered widely across
the stages. Performance maximisation is addressed for Introduction stage (e.g.
O’Reilly and Tushman 2013, Ford and Ryan 1981, Linden and Fenn 2003,
Abernathy and Utterback 1978), Growth I (e.g. Albert et al. 2015, Christensen et
al. 2001, Christensen et al. 2001), The Gap or the Chasm (e.g. Ford and Ryan 1981,
Asthana 1995), Growth II (e.g. Abernathy and Utterback 1978, Prajogo 2015),
Maturity (e.g. Albert et al. 2015, Christensen 1992), and Decline (e.g. Ford and
Ryan 1981, Abernathy and Utterback 1978). Out of which, Abernathy and
Utterback, and Ford and Ryan have probably discussed Performance maximisation
over the life-cycle stages in the most covering manner. This article provides support
for the previous discussion by particularly discussing performance maximisation
over the technology life-cycle stages. Cost reduction is also widely discussed in the
literature, and is discussed by the life-cycle stages for Introduction (e.g. Moore
2002, Ford and Ryan 1981, Albert et al. 2015), Growth I (e.g. Albert et al. 2015,
Fenn and Linden 2003, Moore 2002), The Gap or the Chasm (e.g. Ford and Ryan
1981, Park et al. 2015, Moore 2002), Growth II (e.g. Moore 1998, Ford and Ryan
1981, Albert et al. 2015, Haupt et al. 2007, Ford and Ryan 1981, Villalba-Diez and
Ordieres-Mere 2015, Abernathy and Utterback 1978, O’Reilly and Tushman 2013),
Maturity (e.g. Moore 1998, Lilischkis 2013), and Decline (e.g. Moore 2002). Also
cost reduction is discussed along the life-cycle stages, where probably Moore, and
Ford and Ryan have discussed the most widely. This paper is both in line with these
works, but also provides contribution by particularly combining the discussion on
cost reduction along the technology life-cycle stages. Customisation is addressed
for Introduction (e.g. Linden and Fenn 2003, O’Reilly and Tushman 2013, Moore
2002), Growth I (e.g. Moore 2002, Mueller-Heumann 1992, Shoham and Paun
2015), the Gap or the Chasm (e.g. Christensen et al. 2001, Moore 2004, Kitajima
2015), Growth II (e.g. Moore 2002, 1998, Cedillo-Campos and Sánchez-Ramírez
2013, Oliver et al. 2004), Maturity (e.g. Parrish et al. 2006, Cedillo-Campos and
Sánchez-Ramírez 2013, Tseng and Hu 2014), and Decline (e.g. Utterback, 1996).
Customisation is addressed in the context of individual stages, but not so much
throughout the life-cycle as such, maybe Moore with different papers has
contributed the most. Hence, this paper provides contribution by addressing
customisation through the life-cycle stages. This paper provides new to the
previous discussion particularly by bringing together the discussion on product
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development focus areas of performance maximisation, cost reduction and
customisation along the technology life-cycle stages.
The paper also maps the trend of four technology generations’ product
development activities based on real data on their technology life-cycles. The
important role of cost reduction in later stages of technology life-cycle has been
discussed in the previous literature (Moore 1998, Lilischkis 2013, Abernathy and
Utterback 1978, Anderson and Tushman 1990), as has the important role of
performance in the beginning stages of technology life-cycle (Albert et al. 2015,
Christensen et al. 2001). The results of empirical findings are in line with the
previous findings by showing the ascending trend of product development activities
to reduce cost and descending trend of product development activities with driving
factors of performance maximisation over time. This paper, however provides new
perspectives to previous research by showing the development activities and their
focus for multiple technology generations simultaneously.
The study also provides contribution by finding some potential strategies for
passing the gap in the sales of new technology products in the beginning of the
introduction phase. The chasm, the stage when technology may be trapped and the
progress along the life-cycle is jammed, as discussed by various authors (Asthana
1995, Ford and Ryan 1981, Park et al. 2015). The findings are in line with the
previous literature. The paper however, provides novel contribution by involving
four technology generations in the analysis, all of which have been concurrently in
the market. The results illustrate that another strategy to pass the chasm situation
lies in the internal integration of different technology generations to keep reliability
of the products and buy some time for technical improvement, besides ruining the
customer inertia to use from more mature products. However, the results indicate
that customisation can also be a tool for crossing the chasm, where the difficulty
lies in finding customers for the products, when the products either are still too
expensive, there are still issues with integration, or the market does not yet fully
support the products. This finding is in line with the previous literature discussing
strategies for facing the chasm situation (Moore 2002, Christensen et al. 2001).
Product Development sourcing over technology life-cycle:
Product development sourcing strategies have been previously studied based on the
product perspective in the previous literature (e.g. Moore 1998, Rita and Krapfel
2015), and from the perspective of strategy formulating theories (e.g. Leiblein et
83
al. 2002, Rothaermel and Deed 2006, Spithoven and Teirlinck 2015). The newness
of this article lies in considering the technology life-cycle and sourcing strategies
through the lenses of strategy formulating theories by including three different
models. Hence, this article is simultaneously very much in line with previous
studies, but provides new perspectives by investigating different stages of
technology life-cycle and three sourcing strategies by the requirements of three
strategy formulating theories of transaction cost theory, resource based theory and
knowledge based theory. The paper also provides new perspectives by discussing
the trend of souring strategies as a part of technology life-cycle, something that has
not been done in the previous literature.
According to the findings of this paper, in the beginning stages of technology
life-cycle when the technology knowledge is not available internally, companies
try to gain knowledge by strategic alliances, which is in line with resource based
and knowledge based theories and related literature (Hagedoorn 1993, Rothaermel
and Deeds 2006, Wei et al. 2000, George et al. 2002, Patzelt et al. 2008). Also, in
this paper outsourcing is seen as a way to reduce costs in later stages of the life-
cycle for non-strategic activities and ramping down declining technologies. This
finding is also in line with the previous literature (Masten et al. 1991, Monteverde
1995, Harrigan 2014, Afuah 2001, Leiblein and Miller 2003, Rothaermel and
Deeds 2006, Spithoven and Teirlinck 2015).
The paper discusses three technology generations that can describe the story of
a company and its evolution, the results show that biggest strategic acquisitions can
take place in all the generations when a company becomes the leader of its own
industry and is looking for business extensions. This is in harmony with some
authors arguing that a business extension can be a big incentive for strategic
acquisitions (Harrison et al. 1991). Although many start-ups are also merged and
acquired by companies to add resources and knowledge into the organisation, the
results are in line with previous studies in knowledge acquisition by strategic
acquisition (Chatterji 1996).
Technologies are evolving - product development and sourcing changes
over technology life-cycle?
The last article presents a decision making flow chart for product development
sourcing strategies. In the earlier literature, the authors have studied product
development in conjunction with technology life-cycle (Ford and Ryan 1981,
Abernathy and Utterback 1978, Anderson and Tushman 1990, Little 1981), also
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many product development studies have been based on Core-context model (Go
2007, Moore 2000, Moore 2007, Barlow and Lane 2007, Swanson and Morison
2010), and also the BCG have been for years a well-known method to allocate
investments (Thompson et al. 2008). This study provides new contribution to the
previous literature by using all of these models together and mixing the
requirements to have better insights on product development sourcing strategies.
The use of these methods allows evaluating different layers of decision making in
relation to product development sourcing strategies. In fact three different layers of
short term strategic product development, medium term strategic product
development and long term strategic product development can be acknowledged in
terms of sourcing decisions.
4.3 Practical implications
The entire dissertation provides a clear and straightforward framework, PDSF that
can help executive teams and managers in their decisions on product development
activities and sourcing strategies. The newness of the developed PDSF lies in
illustrating more strategic insights and wider options that may not have been
considered by the decision makers.
A long, medium and short term product development investments and activities
should be triggered and managed based on the company’s product portfolio
management (PPM) targets. In addition, the company’s product development road
map, the big picture of the product development, must be defined according to
product portfolio management targets to define and invest in the needed product
development skills, competences and resources in long, short and medium term.
Besides, mapping all the product technologies can provide information about
different product technologies and their positive and negative interactions. The
positive interactions of different product technologies can be seen as product
integrations of new technology products with mature technology products, and as
technology products smoothly passing the chasm. Additionally, looking at the big
picture of technology life-cycle can enable seeing the profile of product
development sourcing history, one that can provide better insights on experiences
with previous suppliers, allies, or even product development activities.
In order to guide the executive teams and product development managers, the
new product development sourcing framework, PDSF, has been developed by this
study. By using the PDSF the strategic core context for the future, existing and
85
declining businesses can be defined. A result of this study, the most strategic core
context for the future business competitiveness as strategic new technologies,
products and markets at the early life-cycle phases should be managed based on the
internal or acquired resources to keep the most strategic core skills and
competences inside the company. The existing mature technologies, products and
markets, at the mid-life cycle phases are reasonable to manage based on the internal
and acquired resources if they are still available and not fully prioritised for the
future core context. In case of the lack of internal or acquired resources, the
strategic alliances should be used to secure the product development resources for
the needs of the strategic core context of the existing business competitiveness. The
context of the declining business need to be well managed to renew the product
portfolios and manage the transformation of the business over the life-cycle.
However, the most important strategic internal, acquired and allied resources
should not be used for the context of the declining business but to manage the
related skill, competence and resource issues by outsourcing. Understanding the
big picture can help the managers to recognise the product development activities
in relation to different technologies and products within the organisation.
The selection of the product development sourcing strategy is dependent on
internal organisational know-how and knowledge capabilities of the product
development organisation. In addition, the quality, cost, flexibility of product
development concept and resources are critical factors including the
competitiveness of the technological capabilities. The high priority of knowledge
acquisition and know-how in the first stages of technology life-cycle, and the higher
priority of cost efficiency in the later phases of a technology life-cycle should be
recognised by the managers. Also, governance structure of many companies divide
different technology development teams, hence the study shows how gathering all
product development information can provide more supportive data for strategic
decision making.
The provided technology life-cycle structure which is mixture of seven
technology life-cycles, provide a cross-functional framework for managers to
investigate each technology with market penetration situation, manufacturing
capabilities, product development factors, and sourcing capability factors of all the
technology products. Therefore, not only does it make it easier to choose product
development activities and sourcing strategies, but it can ease the act of killing
unproductive projects and unprofitable product lines.
Besides PDSF two other models can be used to evaluate product development
activities, namely BCG and Core-context matrices. These two matrices can provide
86
brief enough insights to managers on market share, market growth, and strategic
differentiation of technologies. Accordingly, analysing data based on technology
life-cycles, core-context and BCG matrices and further by the three strategy
formulating theories: transaction cost theory, resource based theory and knowledge
based theory can provide some benefits. Transaction cost theory provides
perspectives on cost issues, while resource based theory looks at the best shape of
resource utilisation internally and externally. Also, due to the important role of
knowledge in product development activities and sourcing strategies, knowledge
based theory can provide benefits especially in the beginning of technology life-
cycle. Therefore the combination of all the mentioned theories can aid in investing
possibilities of technologies from a wider viewpoint and can provide benefits for
managers and practitioners over all the technology life-cycle stages. Thus the
provided model can potentially provide managers with more reliable results.
4.4 Evaluation and limitations of the study
Collis et al. (2003) argue that the reliability of qualitative studies can be assessed
based on four criteria: trustworthiness, validity, repeatability and the influence of
researcher’s own capability on results. Trustworthiness can be interpreted as
whether the result of the study is obtained in a way that the results closely resemble
the reality. The empirical part of this dissertation are based on not only individual
but group semi-structured interviews. The group meetings provide more accurate
results as all the people discuss each question and the answers’ reliability.
Nevertheless, individual meetings could lighten up the results further when some
of the participants have opposite. Also, Yin (2003) argue that if the cases are not
included in frameworks of representativeness, the results might be bias. The study
tries to build a structure for the high-tech industry, while the case company is one
of the biggest in high tech and its global product development activities can easily
be seen as a samples for many high tech companies, with all the relevant hazards
and complexities. Moreover, studying a single company’s product development
over such a long period, illustrates reliable results away from organisational culture
and other variations that can conduct the results out of scope. Accordingly, as the
results of the empirical part corresponded well with the literature, hence the
trustworthiness of the data can be seen checked continuously.
The second issue presented by Collins et al. (2003) is the validity of the results
for other companies. The entire study, both literature and the empirical parts are
87
realised based on high-tech companies and their complex products and product
development activities. The case company is a multi-billion trader in the industry,
therefore the size and the industry should be considered when modifying the model
and the results. It could also be assumed that the research topic is relevant for the
industry, and thus increase the validity. The research problem been reflected against
relevant literature and the main source for empirical data has been interviewed
experienced industrial managers. In other words, in this research, interviews,
workshops, and different documents have been used as the basis for analyses. Also,
the research data have been collected in different ways to further ensure the validity
of the research. The informants have had the opportunity to provide feedback on
the research and the made conclusions. Also, the research articles have been written
in cooperation and carefully reviewed by other researchers to eliminate the
influence of a single researcher. Also the articles included in this dissertation have
undergone a double-blind review process, and have thus been subject to critical
judgement by the scientific community. Additionally, generalising is one of the
hazards of case studies and qualitative research in general (Denzin and Lincoln
1994). This study encompass many exceptions in each technology life-cycle stage
and each technology generation. If the unexpected decisions were possible to
describe via defined concepts they were investigated, while those that took place
for other reasons and were out of the scope of this study were only mentioned
shortly. Therefore, unnecessary generalisation was tried to be avoided. Moreover,
different strategy formulating theories are included in the model to avoid
unnecessary generalisation and a wide range of assumptions along the process of
decision making.
The third criterion by Collins et al. (2003) is repeatability, which can be seen
as the capability of the research logic to provide the same result with other
researcher’s data and circumstances (Yin 2003). Basically, the research structure is
built to produce results at the same level of reliability and validity. As the
dissertation attempts to produce an applicable model for companies, repeatability
is seen one important target in this study. Nevertheless, the scope and the limitations
of the study must be taken into account. In addition, deployment of different
sources in variety of ways besides following the case study protocols can be prove
the study’s reliability (Yin 2003). Interview were recorded and scripted, to avoid
losing any essential information, they were also tried to be structured according to
the pre-built structures and tables to illustrate what truly had happened during
technology generation’s life-cycles. Besides, as Yin (2003) argues that qualitative
research might include some subjective jeopardies, the researcher has tried to
88
organise interviews, questions and collected data in a systemised way to avoid the
hazard as much as possible. Moreover, in order to avoid personal interpretations
multiple people were present during the interview sessions, Therefore the analysis
was planned from the very beginning to avoid deliberate results by the researcher
and to keep the entire dissertation as objective as possible. Hence, any potential
negative influence of researcher’s own capabilities on the results has been
minimised.
The limitations of this study include analysing limited number of companies
and conducting a limited number of interviews. Also, the selected research
approach may have its limitations and selecting different methodologies might
result in slightly different results. Applying an inductive approach on qualitative
data is not the strongest approach for generalisation. Hence, applying quantitative
research setting might provide some additional value. However, qualitative
research has its benefits in terms of using rich data. The capabilities of the
researcher may also pose some limitations and there is always the possibility of
making incorrect interpretations. Nevertheless, the compilation dissertation
consisting of peer reviewed articles that have been written in cooperation with co-
authors reduces this possibility. Also the number of interviewees reduces the
possibilities of misinterpretations opposed to relying on individual views or
opinions.
Utilising strategy formulating theories as a support for making decisions might
come with some limitations as transaction cost theory, knowledge based theory and
resource based theory, each of them focus within their specific scope. Nevertheless,
the strategy formulating theories, provide valuable viewpoints to support relevant
decisions. Analysing different technology generations of a single company within
a high-tech sector may also have limitations as it ignores possible differences
inherent to any other sectors. However, by the selected focus valuable information
have been obtained also for the benefit of future analyses in other sectors.
Analysing the product development sourcing strategies based on technology
maturity levels during technology life-cycle stages with a specific focus on a single
company also has its limitations. In addition, analysing several different technology
generations simultaneously may have its limitations in terms of homogeneity in
conditions and company data, yet valuable information is obtained by having this
opportunity to analyse multiple technology generations. The limitations also
include the possibility of technological maturity potentially having some company
specifics in interpretations. Also, the utilised literature may have its limitations and
89
using some other important perspectives, or sources might prove additional value.
There might also be some specific limitations linking to each individual article,
ones that are presented in the relevant sections of those individual publications.
Finally, the product development sourcing strategy framework presented as a new
contribution of this compilation requires further testing and analyses and may
hence entail some limitations.
4.5 Recommendations for further research
The further reach could consider modifying some of the elements of the presented
structure based on some new circumstances. Moreover, building a numerical
computer based program that could produce different solutions for the defined
factors and criteria in the real world might prove interesting way to take this
research further. The developed PDSF can be considered the foundation for
numerical decision support, whereas decision making support via user friendly
media might improve the managerial possibilities of truly utilising the framework.
Further, the technology life-cycle phenomenon is extremely applicable tool for
mapping all products in a single view, one that is not only valid for product
development but also in other areas such as product portfolio management.
Particularly for large companies, utilising the potential of the technology life-cycle
phenomenon can be both critical and supportive, therefore studying more
comprehensive multi criteria technology life-cycles could be beneficial in the fast
growing technological market area.
90
91
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Appendices
Appendix1
Table A1 strategy formulating factors
Theory Factors Definition
Transaction Cost Theory
Flexibility Level of value chain capability of adopting with external and internal changes quickly and efficiently (Beamon, 1998)
Uncertainty The level of forecasting probability which can be seen from market, industry and economical viewpoints (Van de Vrandeet al., 2009; Williamson, 1991)
Frequency It effects on the cooperation and cooperation capabilities of companies (Buvik, 2000; Williamson, 1983)
Resource Based Theory
Heterogeneity Level of resource variation which is opposite of monopoly (Peteraf, 1993; Hoopes, and Madsen, 2008)
Rarity As much as the resource is rare in the market the competitive advantage of gaining it is more (Paauwe, and Boselie, 2003)
Imitability The degree that other organisations can imitate the product, process or knowledge (De Carolis, 2003; Barney, 1991)
Substitutability The degree that a resource can be replaced in the market area (Bae and Insead, 2004)
Competition level for a resource
Depends on rarity and imitability, Rare resources might become common due to the competition and might reduce profit (Peteraf, 1993)
Knowledge Based Theory
Transferability Explicit knowledge is easier and less costly to transfer, while tacit knowledge (knowhow) more challenging to document and transfer (Grant, 1996)
Capacity of Aggregation
Depends on the type of knowledge, constant and solid knowledge like instruction of using a machinery has more aggregation capacity than
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management or process development knowledge
(Volberda at al., 2010; Deng et al., 2008 )
Appropriability The level of the sourced knowledge adding value to the organisation although calculating is so complicated as explicit knowledge can be transferred easily and tacit knowledge might not
add value directly (Cohen et al., 2000; Oxley, 1997)
Limitation in Acquisition of knowledge
Limited amount of knowledge can be transferred into one personnel and it should be specified (Brown, Palincsar, 1989; Grant, 1996)
Production Level of knowledge impact on value creation of production (Darr, E.D., Argote, L. & Epple, D. 1995; Grant, 1996)
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Original publications
I Shahmarichatghieh M, Haapasalo H, Distanont A (2013) A comparison of R&D supply chains and service and manufacturing supply chains, International Journal of Synergy and Research, Vol. 2, No. 1–2, pp. 71-89.
II Shahmarichatghieh M, Tolonen A, Haapasalo H (2015) Product life-cycle, technology life-cycle and market life-cycle; similarities, differences and applications, International Scientific Conference on Management of Knowledge and Learning (MakeLearn) & Technology, Innovation and Industrial Management International Conference (TIIM), Bari, Italy 27-29.5.2015.
III Shahmarichatghieh M, Härkönen J, Haapasalo H, Tolonen A (2016) Product development activities over technology life-cycles in different generations, International Journal of Product Lifecycle Management, Vol. 9, No. 1, pp. 14-44.
IV Shahmarichatghieh M, Härkönen J, Haapasalo H, Tolonen A (2017) Product development sourcing over technology life-cycle, International Journal of Procurement Management. In press.
V Shahmarichatghieh M, Haapasalo H, Tolonen A, Härkönen J (2016) Technologies are evolving - Product development and sourcing changes over technology life-cycle?, In Grubbström, R.W, Hinterhuber, H.H., (Eds), PrePrints, Vol. 2, 19th International Working Seminar on Production Economics, Innsbruck, Austria, February 22-26, 2016, pp. 401-414.
Reprinted with permission of the copyright holders. The above-named publications
are the original sources for the five articles above. The publishing house of Maria
Curie Skłodowska University retains the copyright for article I. The authors retain
the copyright for article II. Inderscience retains the copyright for the article III and
IV, and the authors retain the copyright for article V.
The original publications are not included in the electronic version of the study.
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