The framing of knowledge transfers to shared R&D suppliers and its impact on innovation performance: a regulatory focus perspective

When outsourcing research and development (R&D) services, fears of knowledge leakage can make client firms reluctant to transfer knowledge to their suppliers, even at the cost of reducing the performance of the agreement. Outsourcing to R&D suppliers shared with competitors ensures relying on refined capabilities due to the aggregation of the demands of related clients, but also aggravates this interorganizational learning dilemma. Taking a regulatory focus perspective, we argue that the client's commitment to the process of knowledge transfer with a shared supplier will depend on whether the relationship is framed with a promotion or a prevention focus. Using primary data at the transaction level from a survey conducted among 170 European and US technological firms, we find that sharing suppliers with competitors only boosts the client's innovative performance when outsourcing R&D services that do not require the transfer of tacit and firm-specific knowledge. Otherwise, the appropriability hazards involved will make the firm frame the relationship with a prevention focus limiting the client's ability to achieve its innovation objectives.