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Abstract
The researchers also had access to financial data on each company''s research and development intensity (its spending on R&D, if any, as a percentage of revenues), which they used as a proxy for technological change. After all, companies that invest in research and development clearly expect innovation and technological change to be part of the business environment. To be sure, there may be other reasons behind the link between technological change and outsourcing apart from the various innovations that companies buy from their parts suppliers and the sunk costs related to state-of-the-art production equipment. It is possible that the rapid advances in Internet and communications technologies, for example, could have lowered the costs associated with seeking out suppliers and managing relationships with them. Nevertheless, the relationship between technological change and outsourcing demand appears to be established. As a result, advises Bartel, ''be prepared to think more seriously about outsourcing as a way of dealing with technological change. If you are in a world in which technology is continually evolving, it may be expensive to try to keep pace. Outsourcing may be a solution''. While the research is focused on manufacturing industries, its importance may extend further. As Bartel points out, ''to the extent that technological change makes it costly to update technologies, [the research findings] would certainly be applicable to the outsourcing of services as well''.
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Abstract
The researchers also had access to financial data on each company''s research and development intensity (its spending on R&D, if any, as a percentage of revenues), which they used as a proxy for technological change. After all, companies that invest in research and development clearly expect innovation and technological change to be part of the business environment. To be sure, there may be other reasons behind the link between technological change and outsourcing apart from the various innovations that companies buy from their parts suppliers and the sunk costs related to state-of-the-art production equipment. It is possible that the rapid advances in Internet and communications technologies, for example, could have lowered the costs associated with seeking out suppliers and managing relationships with them. Nevertheless, the relationship between technological change and outsourcing demand appears to be established. As a result, advises Bartel, ''be prepared to think more seriously about outsourcing as a way of dealing with technological change. If you are in a world in which technology is continually evolving, it may be expensive to try to keep pace. Outsourcing may be a solution''. While the research is focused on manufacturing industries, its importance may extend further. As Bartel points out, ''to the extent that technological change makes it costly to update technologies, [the research findings] would certainly be applicable to the outsourcing of services as well''.