Read the working paper
INSEAD Working Paper 2013/50/ST
We examine whether, why and when accessing external knowledge via loosely coupled research partnerships may increase the in-sourcing firm’s innovative performance. We argue that innovation benefits from loosely coupled partnerships (e.g. a research contract, licensing) stem not only from the sourcing relationship per se, but are closely linked to the in-sourcing firm’s experimental orientation to pursue risky projects and its availability of financial slack and managerial resources. We test our hypotheses in the global pharmaceutical industry, using a panel dataset covering the world’s largest global pharmaceutical firms between 1998 and 2007. Our results demonstrate that loosely coupled research partnerships, under certain circumstances, may provide the same type of innovation benefits typically attributed only to tightly coupled partnerships (e.g. a joint venture).