Types of technology sourcing and innovative capability: An exploratory study of Singapore manufacturing firms Hongxin Zhao a, * , Xuesong Tong b , Poh Kam Wong c , Jishan Zhu d a Boeing Institute of International Business, John Cook School of Business, Saint Louis University, United States b TCL Thompson, USA c Center of Technology Management, Faculty of Business Administration, National University of Singapore, Singapore d School of Business, Long Island University Brooklyn, NY 11201, United States Abstract Despite a variety of technology sourcing modes that have been identified in the current literature, the existing studies tend to either focus their analysis on either a single mode of sourcing or on the choice of external and internal sources. This study goes beyond the existing literature by identifying the types of various technology sourcing modes based on factor analysis. It further links the technology sourcing types with the innovative capabilities. Using a survey sample of 109 manufacturing firms in Singapore, we identified four types of technology sourcing: partnership-based; market-based; value-chain-based and internal sourcing, and showed the significant relationships between sourcing types and absorptive capability and competitive environment. The statistical results also showed varying impacts of different sourcing types on firms’ innovative capability. D 2005 Elsevier Inc. All rights reserved. Keywords: Technology sourcing; Innovative capability; R&D 1. Introduction Technology is a major source of competitive advantage and represents critical strategic assets. In a world economy increasingly based on the advent of technology, firms are seeking to grow and diversify through technological innovation. However, not all innovations used by a firm need to be developed within the firm’s in-house R&D. This could be due to two reasons. First, because of the high costs often incurred in the process of technological development, companies can no longer rely entirely on their in-house R&D facilities to supply the technology they need. To introduce new products into the market without delay and remain competitive in the industry, firms have to use a mix of strategies to acquire technologies from both within the corporate system and from external sources. Second, rapid development and deployment of technology shortens the product life cycle and technology quickly becomes less proprietary and obsolescent, making access and utilization of readily available technology more important than reliance on in-house generation and possession of technology (Bolton, 1993). As today’s technology becomes increasingly complex and interdisciplinary, it is difficult for an organization to develop the needed technology independently (Radnor, 1991). Thus, internal R&D is no longer the first resort to obtain technology (Coombs, 1998), and technology sourcing through multiple channels becomes a critical factor in maintaining firms’ competitive edge. 1047-8310/$ - see front matter D 2005 Elsevier Inc. All rights reserved. doi:10.1016/j.hitech.2005.10.004 * Corresponding author. Tel.: +1 314 977 3834; fax: +1 314 977 7188. E-mail address: zhaox@slu.edu (H. Zhao). Journal of High Technology Management Research 16 (2005) 209 – 224