Abstract
Outsourcing is an important method of restructuring research and development (R&D). Based on a study of three cases in the telecommunications industry, a tentative framework is proposed for understanding the process of creating alliances by outsourcing R&D, through divesting internal R&D operations and creating alliances with the outsourced unit. Impacts on flexibility from the process, structure, and interface are identified. Understanding these impacts is critical to successful management of R&D outsourcing. How do firms retain and develop flexibility while moving from hierarchy towards a more mixed-mode relationship, with a greater degree of market influence? Impacts on flexibility from the process, structure and interface are identified. Understanding these impacts is critical to successful management of R&D outsourcing and divestiture.