<p>The purpose of this thesis is to find out when Research and Development (R&D) becomes a suitable attribute for a production company to outsource. In an environment where innovations are following up quickly up and uncertainty about the type of innovation and customer is a fact, external sourcing can bring a competitive advantage. The empirical evidence shows that when R&D is outsourced the total cost does not increase at a due cause of outsourcing in this given study.</p><p>Although a lot of theory explains outsourcing as a cost increasing factor, the internal experience and frequent relation between the technical production company Beta and its R&D vendor company Alfa can decrease costs considerably due to lower communication and governance costs. This was not explicitly expressed in related theory and is therefore a contribution to the academia as well as for managers who seek to find an answer to the question of when to outsource and when not to outsource.</p>

The purpose of this thesis is to find out when Research and Development (R&amp;D) becomes a suitable attribute for a production company to outsource. In an environment where innovations are following up quickly up and uncertainty about the type of innovation and customer is a fact, external sourcing can bring a competitive advantage. The empirical evidence shows that when R&amp;D is outsourced the total cost does not increase at a due cause of outsourcing in this given study. Although a lot of theory explains outsourcing as a cost increasing factor, the internal experience and frequent relation between the technical production company Beta and its R&amp;D vendor company Alfa can decrease costs considerably due to lower communication and governance costs. This was not explicitly expressed in related theory and is therefore a contribution to the academia as well as for managers who seek to find an answer to the question of when to outsource and when not to outsource.