Exploring the Role of Value in the Technology Sourcing Decision

New product development is a process that involves the combination and configuration of a multitude of individual technologies. Research and experience show that all firms, even those that are very large, have resource limitations that prevent them from maintaining and developing all of the necessary technologies in-house. The question for firms concerning the management of individual technologies is a complex one. This research adds to our present knowledge of the technology sourcing decision by exploring how the value of a technology is related to whether a firm develops a technology internally or sources it through some external means. This research is set in the medical devices industry, and the conceptual model linking value to technology sourcing is based on previous literature and on exploratory interviews conducted in Finland and the United States. The model is tested with survey data gathered from American firms on 162 individual technologies. The results indicate that the relationship between value and internal sourcing is strongest when value is defined operationally (reduces costs) than when it is defined strategically (increases differentiation). Additionally, the uniqueness of a technology is antecedent to its value