Internal vs. External Learning in New Product Development : Effects on Speed, Costs and Competitive Advantage

The purpose of this study was to investigate how different technology sourcing strategies throughout the new product development process influenced innovation speed, development costs, and competitive advantage. We studied 75 new product development projects from ten large, U.S.-based companies in several industries. Results indicated that: (1) more external sourcing during the early (i.e., idea generation) stage was related with lower competitive success; (2) more external sourcing during the later (i.e., technological development stage was related with slower innovation speed; and (3) development costs tended to rise with greater reliance on external sources of technology, but this result was not statistically significant