Innovation Processes in the Car Industry: New Challenges for Management and Research

Over the past decades the development of a car has become a complex activity involving skills and resources from a variety of industries and actors, and requiring the accomplishment of tight regulatory norms and market needs. Technological and market forces have led incumbent firms to radically change the organization of their innovative activities, shifting from a closed vertically innovation model to a distributed one. The aim of this study is to review the main challenges carmakers are currently facing and the organizational and strategic solutions adopted to perform innovative and development activities within vertically fragmented networks. The chapter casts light on the organizational and strategic challenges of downstream development activities, then it also tries to overview the strategic role of up-front research activities, namely the research activities leading to patenting. The main changes brought by the distributed innovation model on new product development activities are discussed, focusing on the principles guiding outsourcing decisions and the governance mechanisms carmakers use to manage networks of external suppliers. The study, then, reviews the role of patenting in the industry as a means for carmakers to appropriate value from innovation in vertically fragmented networks. Finally, it discusses the changes on the organization of innovation activities that the emergence of the electric car-standard may imply for carmakers’ innovation strategy.