IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Outsourcing Of New Product Development And The Opening Of Innovation In Mature Industries: A Longitudinal Study Of Fiat During Crisis And Recovery

Listed author(s):


    (Royal Holloway School of Management, University of London, Egham, TW20 0EX, United Kingdom; INCAE Business School, Costa Rica)



    (School of Business and Management, Queen Mary, University of London, Mile End Road, London, E1 4NS, United Kingdom)

During the 1990s mature industries, such as car manufacturing, restructured their production and innovation processes, changing from vertical integration to high outsourcing. Open innovation is antithetic to vertical integration. Analyzing whether this restructuring influenced the emergence of open innovation is an important step towards improving our understanding of open innovation (Chesbrough and Crowther, 2006).During the 1990s, Fiat, one the largest European car producers, increased the extent to which it involved external firms in new product development (NPD). Unlike its competitors, Fiat outsourced the NPD of core products, resembling the opening of innovation that "radical innovators" implement in high technology industry (Laursen and Salter, 2006, 137). However, it failed to transition towards open innovation because its "opening" to external firms also entailed downsizing in-house NPD divisions, which caused a "hollowing out" of its knowledge (Becker and Zirpoli, 2003). The products developed through this system did not perform well. After a dramatic decline in market shares, Fiat changed its NPD system: it reduced outsourcing of NPD, whilst opening it to customers for the first time. This contributed to the development of highly successful models, which fuelled Fiat's recovery after 2004.The paper explains the Fiat case by looking at the drivers of its organizational changes from a historical perspective. It argues that Fiat's cost-cutting routines, developed because of its intangible specialization in small vehicles, explain why it opened NPD to suppliers but failed to adopt open innovation. The case study is relevant for the study of open innovation because it provides evidence of the relationships between outsourcing and open of innovation in a mature industry that went through a profound process of restructuring during the 1990s.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: Access to full text is restricted to subscribers.

File URL:
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by World Scientific Publishing Co. Pte. Ltd. in its journal International Journal of Innovation Management.

Volume (Year): 15 (2011)
Issue (Month): 01 ()
Pages: 69-93

in new window

Handle: RePEc:wsi:ijimxx:v:15:y:2011:i:01:p:69-93
Contact details of provider: Web page:

Order Information: Email:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:wsi:ijimxx:v:15:y:2011:i:01:p:69-93. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Tai Tone Lim)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.