Technology sourcing decisions in exploratory projects

Drawing on research on innovation as knowledge combination and firm’s organizational boundaries the paper contributes to open the black box of a firm’s sourcing strategy, investigating how the new knowledge a project aims to develop affects sourcing decisions. The fine-grained level of investigation adopted, namely the project level, not only enhances the understanding of the antecedents of sourcing decisions in any single project but provides primary explorative evidence on the concept of a company sourcing strategy as a portfolio of decisions across projects. Our test is implemented on a sample of 60 New Product Development projects carried out by a group of leading Italian firms, operating in the machine tool industry. We identify two knowledge dimensions that are the determinants of sourcing decisions at project level: novelty, new functions that satisfy emergent market needs, and breadth, heterogeneity of technological fields that encompass possible solutions to product problems. Our findings how that in firms choosing sourcing configurations on a project-by-project basis, exploratory projects, which search at the frontiers of either novel product features or heterogeneous technological domains, spur firms to exploit the potential advantages of external sources.