Subcontracting and Innovation

It is common knowledge that subcontracting is an option for contractors to augment their capabilities and bring in external expertise.

What is less known is that a contractor – subcontractor relationship can yield more than just immediate financial benefits for the subcontractor side.

Research suggests (e.g. Rachel Bocquet. Product and Process Innovations in Subcontracting: Empirical Evidence from the French “Sillon Alpin”) that taking on work for other organisations can positively impact product and process innovation.

 What is key is how the relationship is structured. Contractual mechanisms that guarantee incentives for innovation, mid-to-long term contracts, organisational structures that favour knowledge exchange and a collaborative approach are all factors that can help improve a company’s ability to innovate.