Abstract
This paper proposes a framework for the facilitation of organisational capability for outsourcing innovation, enabling firms to take advantage of its many benefits (e.g., reduced costs, increased flexibility, access to better expertise and increased business focus), whilst mitigating its risks. In this framework a generic holistic model is developed to aid firms to successfully outsource innovation. The model is realised in two stages using a qualitative theory-building research design. The initial stage develops a preliminary model which is subsequently validated and refined during the second stage. The propositions which form the preliminary model are deductively explored to identify whether they also exist in a second data set. A semi-structured interview survey is executed with the aid of a rich picture survey instrument to gather data for this purpose. The model developed by this study describes innovation outsourcing as an open system of interrelated activities that takes established company strategy (in terms of people, organisational structures, environment, and technology), and transforms it into improved firm performance through innovation. The model achieves this through a three-stage process which enables the alignment of capability to outsourced innovation activity, and makes actual performance outcomes, rather than expected benefits, the focus of innovation outsourcing aims.