Analysis of Outsourcing Innovation

The BusinessWeek article "Outsourcing Innovation," by Pete Engardio and Bruce Einhorn, is about no particular company, so there is no mission statement, social responsibility, or ethics to evaluate. The external environment is the key facet of the topic that is relevant to the article, as the subject of outsourcing innovation in general in the technology industry is its real focus. The main point of the article is that outsourcing innovation is a cost-cutting measure that carries with it some major shortcomings and substantial risks. The authors point out that while "more innovation is vital... current R&D spending isn't yielding enough bang for the buck" (Engardio & Einhorn, 2005). They also explain that "The downside of getting the balance wrong...can be steep" and that brand-name companies can actually lose their incentive to continue investing in new technology (Engardio & Einhorn, 2005). They quote the Boston Consulting Group's senior vice-president Jim Andrew, who states, "It is a slippery slope...If the innovation starts residing in the suppliers, you could incrementalize yourself to the point where there isn't much left" (Engardio & Einhorn, 2005). The authors acknowledge that while it is commonplace to outsource in this day and age, outsourcing research and development(the heart of a company's innovative potential(is risky. Even though the outsourcing companies "impose strict confidentiality on suppliers," there is no guarantee that the move to outsour

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Category: Business - A