Formal R&D Management and Research Collaboration and R&D Outsourcing in SMEs

The views on 'distributed' or 'open' innovation emphasize the use of external knowledge in order to innovate. Particularly for SMEs, research cooperation and R&D outsourcing can offer possibilities to complement the often limited internal research resources. However, external knowledge relations potentially bring in their wake a loss of technology assets. his paper focuses on research cooperation and R&D outsourcing in SMEs. Two functions of research cooperation are envisaged: generating new knowledge and exchanging existing knowledge previously developed within the firm. The paper addresses two items that are underdeveloped in the current literature. First, attention is paid to the heterogeneity in terms of firm size of SMEs. A distinction is made between micro, small-sized, and medium-sized firms. Second, consideration is given to the formal management of R&D activities. This is related to the management of the potential risks inherently involved in external knowledge relations. It is measured by the presence of a formal R&D manager within the SME. A descriptive quantitative empirical analysis is presented based on firm-level data provided by the OECD business R&D survey for Belgium covering the period 2004-2005. The starting point is a representative sample of 140 (quasi-) permanent R&D active SMEs. The analysis reveals marked differences in R&D outsourcing behaviour according to the size of the SME. In this respect, medium-sized firms are found to be significantly less involved in R&D outsourcing (one out of four firms) compared to micro and small-sized firms (one out of two firms is engaged in R&D outsourcing). On average, two-thirds of the (quasi-) permanent R&D active firms have a formal R&D manager and there are no marked differences according to firm size. The presence of an R&D manager turns out to be significantly associated with the firm's engagement in R&D outsourcing and with knowledge exchange in research cooperation. There is no interaction effect between the presence of an R&D manager and firm size to explain firm engagement in research cooperation and R&D outsourcing.