Understanding outsourcing strategy within the intellectual property industry - a proposed typology

Abstract

Outsourcing has gained much importance in managerial practice and academic discussion. This paper investigates the phenomenon of outsourcing knowledge-based work, particularly of intellectual property (IP). Using data from 36 cases, the analysis reveals a distinct typology of IP outsourcers based on a cost model and the firms' IP outsourcing strategy. Four in-depth case studies are analysed: non-outsourcer transaction cost outsourcer, expertise outsourcer, and strategic outsourcer. The differentiated analysis reveals trade-offs and both positive and negative effects of the IP outsourcing strategy. We suggest that firms need a differentiated approach based on the type of IP work (legal versus non-legal) and outsourcing breadth (number of outsourced IP services) to manage intellectual property rights (IPR) with external suppliers most efficiently. We conclude by providing practitioners five important lessons for the outsourcing of IP activities.