Technovation 23 (2003) 905–915

www.elsevier.com/locate/technovation

Leveraging e-R&D processes: a knowledge-based view

Eric H. Kessler ∗
Lubin School of Business, Pace University, 1 Pace Plaza, New York, NY 10038-1598, USA

Abstract

There is a growing application of Internet-driven networking tools to improve organizations and teams’ value-creating activities.
This is particularly true with regard to applying the technology to the conduct of industrial research and new product development
processes, or e-R&D. Notwithstanding, there is scant scientific research to assess how R&D teams are leveraging the Internet in
their innovation activities, if their efforts are efficient and effective, and how they could do better. This paper considers the following
interrelated research questions: (1) How can Internet-leveraged networks contribute to R&D project management, (2) Where are
these networks applied in the R&D process, and (3) What are the likely manifestations of such networks? It develops a framework
for understanding and testing these issues, based on a knowledge-based view of the firm, to examine internal, external, and memory-
related knowledge flows. Then, a three-dimensional template of e-R&D networks is developed that overlays each of these three
flows, based on Internet attributes, R&D process stages, and major R&D outcomes. Research hypotheses are offered, and directions
for future inquiries are discussed.
 2003 Elsevier Ltd. All rights reserved.

Keywords: R&D; Innovation; Internet

1. Introduction trial research and development processes (Alsene, 1999,

There is much emphasis these days on building effec-
tive networks, which is well justified given the impor-
tance and pervasiveness of network analysis in under-
standing management and organizations. From
population ecology to sociometric analysis, network con-
cepts and modeling approaches have helped us under-
stand related phenomena at the population, inter-organi-
zational, intra-organizational, and interpersonal levels
(Scott, 1992). This paper focuses on the Internet, defined
as the world’s largest information network that connects
computers and the regional and the local networks that
connect these computers (Leshin, 1997). The Internet
provides networking-related tools that can be used by
intra- and inter-organizational groups engaged in the
research and development (R&D) process.
The Internet profoundly influences people’s personal
lives and a growing number of organizational functions.
It affects technology strategy and the conduct of indus-
∗
Corresponding author. Tel.: +1-212-346-1885; fax: +1-212-346-
1573.
E-mail address: ekessler@pace.edu (E.H. Kessler).
Burn and Barnett, 1999; Van den End and Wijnbeg,
2001). The growing impact of Internet networking tools
on R&D is manifest in its transformation of the pro-
cesses by which organizational actors acquire technical
knowledge, develop new products and services, and con-
nect with users. In short, the Internet affects R&D-ori-
ented organizations and groups by changing “the way
minds work together” (Hafner, 2001).
Consider the following trends: More than one-third of
businesses now use cyberspace for everything from fin-
ance to product development and virtual prototyping.
Penetration in corporate research has become even
greater, as almost 80% of engineers now use the Internet
for gathering procurement information and almost 95%
of researchers have started using the Internet in some
form or another to improve their design and development
work. Combined, these observations suggest that cyber-
innovation processes, or “e-R&D” (c.f., rolandber-
ger.com, 2001), has emerged as a cutting-edge area of
application and investigation. Thus, it certainly warrants
the attention of academics, consultants, and corporate
professionals in the technology and innovation manage-
ment field.
Notwithstanding, there has been comparatively little

0166-4972/$ - see front matter  2003 Elsevier Ltd. All rights reserved.
doi:10.1016/S0166-4972(03)00108-1
906 E.H. Kessler / Technovation 23 (2003) 905–915
conceptual modeling, especially with regard to big-pic-
ture relationships, and systematic, empirical investi-
gation into the optimization of these tools across the
innovation process. That is, although there is a general
acknowledgement in the literature that Internet-enabled
networks are a potentially valuable tool to facilitate R&
D activities, there are few specific, empirical studies that
systematically investigate this assertion. Instead, most
research-related articles in this field are derived of idio-
syncratic observations and small-sample case descrip-
tions. Moreover, these articles are largely disconnected
from each other. They appear in a wide variety of litera-
ture and seldom cross-reference or build from each
other’s specialized focus. Indeed, it is fair to say that the
literature is somewhat embryonic and fragmented.
To provide an overall picture of the general state of
the related literature, we adapt and apply Deise et al.’s
(2000) typology of e-business channel enhancements
that result from leveraging information technology such
as the Internet. Through this lens, one can conceptualize
e-R&D input (or upstream) enhancements, conversion
(or business process) enhancements, and downstream (or
selling and service) enhancements.
In terms of general considerations of e-R&D net-
working tools, Andrews (1999) argues that the Internet
impacts R&D primarily by altering not the end products
but the overall R&D process. Andrew’s proposition is
consistent with the tone of this manuscript, where I focus
not on e-products but on e-R&D. Similarly, Antonelli et
al. (2000) argue that the Internet is a critical medium for
linking the development of information and new knowl-
edge with its application. They contend that the Internet
can be used to change the process of the accumulating
new knowledge and affect the pace and direction of sub-
sequent technological convergence upon which the evol-
ution of information and communication technologies
rests. Ghosh (1998) adds that the Internet presents differ-
ent types of opportunities for established businesses, one
being its use to develop and deliver new products and
services for new customers. He discusses potential ways
for a company to do this: Use it for direct access to
customers (marketing), to mine its own digital assets to
serve new customer segments (new niches), and to con-
duct transactions over it (e-commerce). Sweeney (1999)
reports on several firms that are “leveraging Internet
technology to streamline product development, manage
teams of workers in geographically dispersed locations,
and reduce time to complete projects”. Nevertheless, he
concludes “the average company still lags well behind”
these trailblazers. This is important, for Miller (2001)
rightly observes that the Internet will be a critical
component in fourth generation (4G) technology man-
agement; alas, most firms are still practicing outmoded
forms of technology management. Also, McGrath (2001)
claims that the networked economy is changing all the
rules in innovation. All in all, the consensus appears that
the Internet’s potential is not equaled by its current state
of leverage within and between organizations to create
networked processes.
With regard to upstream utilization of the Internet in
an e-R&D process, Barua et al. (1997) developed an ana-
lytical model that offers buyers a maximized payoff from
the selection process by using the Internet for procure-
ment. Mitchell (2000) and Finch (1999) propose ways
that the Internet can help corporations capture the crea-
tivity and insight of consumers and suppliers. More
specifically, Plymale and Hartgrove (1999) elaborate on
two areas “ripe for evolution on the Web”, online com-
parison of components and design-in capabilities in
component selection. Indeed, Studt’s (1999) survey of
industrial researchers reveals that, currently, the
maximum use of the Internet was finding technical infor-
mation followed by finding new product information and
then sourcing and purchasing information. Hefner (2001)
illustrates this by describing Chrysler’s development
process for a new wireless headset for its minivan, which
used the Internet to coordinate the half-dozen contractors
in virtual meetings.
With regard to process management via the Internet
in an e-R&D process, Deitz (1997) ponders ways to re-
architecture design tools such as CAD, CAM, and CAE
to smoothly interface with the Internet. Iansiti and
McCormack (1997) and Gardiner and Ritchie (1999)
consider whether the Internet can be used to create a
more effective development process for new products.
To this end, Richir et al. (2001) describe a digital engin-
eering design process that allows quicker innovation in
a more creative way and favors direct commercialization
of industrial products that may be kept virtual throughout
the design process. They argue that this type of process
also offers the potential for design as well as marketing
of these industrial products. For example, Sawhney and
Prandelli (2000) show how the Internet can enable “com-
munities of creation”, or virtual shared spaces for hosting
relationships and facilitating knowledge generation and
sharing. Subsequent to design, Dahan and Srinivasan
(2000) describe an Internet-based product concept test-
ing method that incorporates virtual prototypes of new
product concepts. These authors elaborate on the poss-
ible ways of applying the Internet to facilitate a low-cost,
parallel testing procedure that produced market shares
closely mirroring those obtained with the physical pro-
ducts.
In a slightly different yet complementary angle, Gupta
(1997) considers the possibilities of using Intranets and
Internets to facilitate internal communication. To this
point, Hameri and Nihtila (1997) observe that the Inter-
net and World Wide Web (WWW) can be effectively
used to manage and disseminate project information
throughout an organization. Similarly, Hibbard and Car-
rillo (1998) discuss the potential for leveraging the Inter-
 E.H. Kessler / Technovation 23 (2003) 905–915
net to facilitate knowledge management strategies in
general.
With regard to downstream application of the Internet
in an e-R&D process, Corbiltt (1999) offers useful
observations about how the Internet might be best used
for secure financial transactions (e.g., digital signatures
and firewalls). Darko (1999) describes some applications
for developing partner-like relationships between com-
panies and consumers. Landry (1999) discusses the
potential in the area of Internet-based product testing,
which allows companies to get customers’ reactions
quickly and cheaply. Moreover, Mathieu (2001) argues
that, since technology transfer can be viewed largely as
a communication phenomenon, web-based information
systems can be used to help technology transfer.
Specifically, he examines manufacturing technologies
related to rapid prototyping, production planning and
control, performance measurement, design for manufac-
ture, supply chain management and manufacturing
simulation.
In summary, the relevant e-R&D-related literature is
largely a collection of practitioner-based observations
and illustrative case studies, as well as a growing yet
poorly connected body of more scholarly inquiries.
There is scant theory-driven research to assess how com-
panies are leveraging the Internet, if their efforts are
efficient and effective, and how they could do better.
This paper attempts to enhance the foundations for such
a broad-based endeavor. It adopts a knowledge-based
view of the firm and offers a more general tone to reflect
the relative embryonic state of the scientific research
literature as compared to actual business practices. For-
mally, it consider the following interrelated research
questions: (1) HOW can Internet-leveraged networks
contribute to R&D project management, (2) WHERE are
these networks applied in the R&D process, and (3)
WHAT are the likely manifestations of such networks.
2. Hypotheses development
2.1. e-R&D networks vis-a-vis a knowledge-based
view of the firm
A knowledge-based view of firm activities is centered
around the notion that a firm’s success depends on how
well it can (a) enhance its own knowledge base by either
creating or obtaining new knowledge, (b) integrate its
different knowledge areas, and (c) apply its knowledge
to the development or enhancement of products or pro-
cesses (Grant, 1996; Nonaka, 1994; Kogut and Zander,
1992). Both internal and external knowledge flows con-
tribute to R&D-oriented group activity, although there is
considerable variability between projects on their rela-
tive degree of contribution. In addition, inter-project
learning via organizationally institutionalized memory
907
structures also contributes the knowledge applied to a
project (Burgelman and Rosenbloom, 1989; Prahalad
and Hamel, 1990). How well an organization’s teams
manage relevant internal and external networks, as well
as the cumulative and long-term manifestations of these
networks in its organizational memory, has direct impli-
cations concerning the success of its R&D processes
(Kessler et al., 2001, 2000). These relationships are rep-
resented in Fig. 1. The subsequent sections discuss how
leveraging Internet-driven e-R&D networking tools can
be a valuable tool for facilitating internal, external, and
memory-related knowledge flows.
2.2. Internal learning networks
The internal learning processes of an organization’s
R&D groups start with the creation of knowledge by
individuals (Simon, 1991); e-R&D networking tools can
give individuals access to a world of information and
potential fodder for insights, ranging from general news
webpages to a firm’s project database. New ideas are
then circulated among small networks of co-workers in
a “community-of-practice” in the sense that they share
similar perspectives and interpretation frameworks
(Brown and Duguid, 1991; Hedberg, 1981); e-R&D net-
working tools can provide channels for idea circulation
and can standardize information distribution approaches
to develop shared frameworks. Organizational learning
occurs when the knowledge is transferred to the larger
organizational network of individual specialists, inte-
grated with other knowledge areas, and applied to a new
product or process (Nonaka, 1994); e-R&D networking
tools can facilitate knowledge transfer and, when com-
bined with database tools, help integrate knowledge into
existing paradigms and memory. Further, e-R&D net-
working tools are particularly well suited to overcome
traditional barriers to internal learning networks by pro-
moting values such as openness and teamwork
(Starbuck, 1992), decentralized linkages and knowledge
flows (Fiol and Lyles, 1985), and enhanced quantity and
quality of communication (Damanpour, 1991).
Hypothesis 1a. Organizations that leverage e⫺R&D
networks in project groups’ internal learning processes
to a greater extent will be more successful innovators
than those organizations that do so to a lesser extent.
Fig. 1. General knowledge flows in a networked R&D process.
908 E.H. Kessler / Technovation 23 (2003) 905–915
2.3. External learning networks
In contrast, the external learning process starts with
the identification of a new idea by an outside source and
the subsequent inter-network integration of this idea into
the focal organization. The new ideas may come from
customer and lead user feedback (Pascale, 1984; Von
Hipple, 1988); e-R&D networking tools are a source of
feedback insofar as they provide advanced and real-time
linkages with these parties. External ideas can also be
copied from competitors via the monitoring of patents,
publications, and public statements (Ghoshal and
Westney, 1991; Gilad and Gilad, 1988; Bierly and Chak-
rabarti, 1996); e-R&D networking tools can help monitor
these developments through business intelligence fea-
tures, such as automatic scan and manual search pro-
cedures, that sift through and pinpoint relevant infor-
mation among the immense Internet-available pool of
information.
Organizations’ R&D-oriented groups also learn from
others outside their industry such as university and
government research centers (Imai et al., 1988; Mowery
et al., 1996; Porter, 1990); e-R&D networking tools can
provide vehicles for participating in these geographically
dispersed cooperative arrangements. Additionally, e-R&D
networking tools are particularly well suited to overcome
traditional barriers to external learning, such as the not-
invented-here (NIH) syndrome (Katz and Allen, 1982),
insofar as they make the process of group members
accessing outside information easier and more legitimate
and increase the degree to which existing expertise can
be applied to understand the outside source (Cohen and
Levinthal, 1990).
Hypothesis 1b. Organizations that leverage e⫺R&D
networks in project groups’ external learning processes
to a greater extent will be more successful innovators
than those organizations that do so to a lesser extent.
2.4. Organizational memory and longitudinal learning
networks
Over time, a firm’s success in R&D is a function of
the cumulative development of internal and external
learning. Therefore, the management of an organiza-
tion’s memory, or the stored information from its history
that can be transferred from group to group and brought
to bear on present decisions (Walsh and Ungson, 1991),
is crucial. As individuals and groups share and integrate
knowledge, the knowledge is stored in the organizational
structure, systems, routines and procedures. This contrib-
utes to the development of technological capabilities that
can be applied across projects (Burgelman and Rosen-
bloom, 1989; Prahalad and Hamel, 1990). When individ-
uals leave a team or organization, some of their knowl-
edge also leaves but, depending on the effectiveness of
the organizational memory, some also remains as insti-
tutionalized practices. e-R&D networking tools can be
used to capture and store knowledge through systemized
collection and coding of tasks and projects in files and
formal procedures and dissemination can be improved
by the use of computer systems and organizational
intranets. For example, information, expert, and prob-
lem–solution databases can be used to facilitate inter-
project learning.
However, it is important to note that much R&D-
related knowledge is tacit, or difficult to codify. There-
fore it must be shared, stored and retrieved by more
direct communications and sharing of experiences
(Nonaka, 1994). It is critical during the new product
development process to convert tacit knowledge stored
in the organization’s memory into explicit knowledge
that can be understood by individuals lacking experience
in a specific area. To this end, e-R&D networking tools
can help overcome barriers to this translation by aiding
in the storage and dissemination of information
(Huber, 1991).
Hypothesis 1c. Organizations that leverage e⫺R&D
networks in project groups’ institutionalized memory
processes to a greater extent will be more successful
innovators than those organizations that do so to a
lesser extent.
2.5. A 3-dimensional model of Internet-driven e-R&D
networked processes
Second, I consider the nature and effects of applying
the Internet to facilitate these knowledge flows via net-
worked R&D activities—i.e., e-R&D. In a global sense,
I apply Deise et al.’s (2000) model to postulate that the
Internet can (a) facilitate existing tasks in the R&D pro-
cess (can do the same stuff faster, cheaper, better)—it is
an enhancement and of incremental value—and (b) the
Internet fundamentally alters the R&D process (new
game, new rules, new criteria, new steps, tasks, and
sequences, etc..)—it is transformational and of frame-
breaking value. This is consistent with research in the
innovation literature that suggests R&D projects should
be distinguished by their degree of radicalness, or degree
of change (Damanpour, 1991; Eisenhardt and Tabrizi,
1995; McDonough, 1993). Radical innovations are less
certain, involve a greater proportion of experimentation
and iterative problem solving, and hence require more
flexibility and learning; e-R&D networking tools can
provide low-risk experimentation options via electronic
mediums and broad access to sources of information and
learning. Incremental innovations are more certain,
involve a greater proportion of planning and implemen-
tation, and hence require more efficiency and com-
pression; e-R&D networking tools can provide planning
and organizational resources as well as cost-effective
communication and distribution and systems.
 E.H. Kessler / Technovation 23 (2003) 905–915
Hypothesis 2a. An Internet⫺driven networked e⫺R&
D process can both enhance and transform R&D.
It is also important to heed the advice of scholars who
have pointed to a moderated relationship between
knowledge flows and stages in the innovation process
(e.g. Damanpour, 1991; Spender and Kessler, 1995). For
example, Kessler et al. (2000) found that the func-
tionality of applying external knowledge (such as that
accessed via the Internet) to the R&D process is different
depending on the type of knowledge and the stage of
R&D to which it is applied. This means that some tasks
might be seen as more sensitive to e-R&D interventions
than others. Moreover, it is important to acknowledge
that strategy and specifically new product innovation
will be different depending on the industries and con-
texts considered (e.g., Henderson and Mitchell, 1997;
Schoonhoven et al., 1990). For instance, e-R&D might
be more valuable to teams within firms with a fast-fol-
lower or efficient-producer strategy who need to access
existing information, or perhaps within firms with a first-
mover strategy who need to quickly create and inte-
grate information.
Additionally, e-R&D might be more valuable to teams
within large firms that have greater information systems
capability or perhaps within small firms who may be
more flexible and receptive to new information and its
permutations. Extending this logic, it stands to reason
that the Internet will be more or less functional in differ-
ent types of competitive, technological, demographic,
etc. environments. For instance, e-R&D might be more
important in fast-moving contexts (e.g., it offers real-
time interpersonal access), hyper-competitive contexts
(e.g., it may be exploited as a source of advantage), and
ambiguous contexts (e.g., it serves as a source of
information). Notwithstanding the many potential mod-
erating variables and permutations of their interactions,
a more general argument is offered for these types of
contingent relationships and testing specific phenomena
within its logical umbrella.
Hypothesis 2b. The functionality of an Internet⫺
driven networked e⫺R&D process will be moderated by
groups’ context such as R&D stage, firm size and strat-
egy, and industry.
We can develop a three-dimensional model to more
specifically examine the functionality of various attri-
butes of the Internet at various stages of the R&D pro-
cess on various R&D outcome variables—see Fig. 2.
This 3D e-R&D model finds its roots in the logic of
similar models that explore multiple simultaneous inter-
actions such as the “House of Quality” (Hauser and
Clausing, 1988). The 3D e-R&D model is used to exam-
ine the effects of Internet application (segmented by its
different attributes or functionalities) on the R&D team
process (segmented by its different stages or sets of
related activities) and manifest R&D outcomes
(segmented by its different dimensions or strategic
909
Fig. 2. 3-D model of Internet-driven networks influence on R&D (3D
e-R&D).
variables). It is essentially a tool for exploring the
dynamics of e-R&D networks for each of the internal,
external, and memory knowledge flows described in the
preceding section.
The first dimension of the 3D e-R&D model is major
Internet attributes. Identifying and analyzing the specific
functions of the Internet allows us to assess its potential
benefits and detriments to the R&D process. Consider
for example the following functional features of the
Internet (Muller, 1999) as detailed in Table 1.
These Internet attributes can be simplified and con-
densed into the following four general categories of
Internet functions (Leshin, 1997):
1. Communication (e.g., email): Allows group members
to send, forward, and receive messages from people
all over the world. Enables members to reply to, save,
file, and categorize received messages. Enables mem-
bers to participate in electronic conferences and dis-
cussions as well as to request information from agenc-
ies, organizations, institutions, and other people.
Email represents one form of Internet communication,
along with electronic discussion groups (listservs and
usenets), Internet relay chat (IRC), Internet phones,
and desktop Internet video conferencing.
2. Connection (e.g., Telnet): Provides the capability to
login to a remote computer and work interactively
with it. Allow group members to work on the remote
computer’s power and speed and utilize its software.
Some services available through Telnet include data-
bases, libraries, chats, and bulletin boards.
3. Transfer (e.g., file transfer protocol, or FTP): Method
that allows group members to move files and data
from one computer to another. Enables members to
download (receive) and upload (send) information
such as books, documents, and software.
4. Access (e.g., World Wide Web): Collection of stan-
dards and protocols used by group members to access
information available on the Internet such as docu-
910 E.H. Kessler / Technovation 23 (2003) 905–915

Table 1
Major Internet attributes

Internet attribute Examples

Business-messaging Calendar/scheduling, document management, line-of-business applications, workflow management,

supply-chain management, fax routers
Call centers Telemarketing, customer service
Chat Address book, alias support, audio conferencing, channel filtering, client-to-client protocol, colored text,
encryption, whiteboard, yellow pages
Client server network Global enterprise solutions
Data warehousing Remote access and storage
Distance learning Education/training
E-commerce Product and service sales, online banking
Electronic data interchange Business transaction support, online editing
Extranet Self-service opportunities for customers, 24/7 availability
Facimile over IP Worldwide paperless faxing
Interactive whiteboards Virtual meetings, virtual teams
Intercast Multimedia service (PC/TV/Internet)
Internet telephony Cheaper phone calls
Intranets Privacy, security
Newsgroups Electronic discussion group or bulletin board (usenet)
Telecommuting Remote work
Videoconferencing over IP Expanded participation in virtual meetings
Web advertising Online marketing
Wireless IP over cellular networks Mobile office, financial transaction, telemetry, transportation, Internet access
WWW Use of HTML forms to convey, move, add, change information, asset management via central console

ments, images, video, and sound. Information is
linked together in a hypermedia system. Requires
browsers to view web documents and navigate
through the web structure. Utilizes search engines and
directories for organizing information. Links to public
and private domains, the latter protected with pass-
words and firewalls.
The second dimension of the e-R&D model is major
R&D process activities. This builds on the previous dis-
cussion of the Internet–R&D outcome relationship.
Here, I map specific Internet attributes to specific R&D
activities in order to develop a more sophisticated assess-
ment of the research questions. That is to say, one can
look for relationships between delineated tool-sets (of
the Internet) and isolated task-sets (of the R&D team
process). To this point, I examine several categories of
R&D activities and document how real companies facili-
tate R&D-oriented group processes by using the Internet.
Consider for instance some of the ways that firms are
applying the Internet to various R&D sets of activities—
see Table 2.
These R&D activities can be simplified and condensed
into the following four general categories of stages or
task sets (Burns and Stalker, 1961; Daft, 1982; Kessler
and Chakrabarti, 1996; Roberts, 1988; Spender and
Kessler, 1992):
ties (Bower, 1970; Quinn, 1985). These factors
include organizational policies and other paradigmatic
activities related to the attributes of particular inno-
vations that influence how much importance is actu-
ally placed on fast product development.
2. Initiation: The initiation “stage” of innovation is
characterized by knowledge-generation activities
where situations are defined and ideas are proposed.
Initiation consists of all activities pertaining to the
recognition of a performance gap or unexploited
opportunity, diagnosis and definition of the need or
opportunity, search for relevant information, gener-
ation of ideas and alternatives, and development of
alternatives and prototype solutions. Thus, in this
early stage, organizations pursue technical success
(creativity) by transforming money into ideas.
3. Implementation: The implementation “stage” of inno-
vation is characterized by knowledge-application
activities where the selected ideas and prototypes are
integrated or captured into the organization and put
into practice. Implementation consists of all activities
pertaining to the transition of the innovation ideas to
profit-generating entities, utilization of the innovation
to achieve its intended objectives, and institutionaliz-
ation of the innovation. Thus, in this later stage,
organizations pursue business success (exploitation)
by transforming ideas into money.

1. Pre-development: Pre-development activities relate to The third dimension is major outcomes of R&D.
the strategic orientation of a project and provide the Specifically, I look at how Internet-driven networks, via
guidance and broad objectives for development activi- their impact on R&D activities, affect critical team pro-
 E.H. Kessler / Technovation 23 (2003) 905–915 911

Table 2
Internet-networks and major R&D activities

R&D activities Examples

Getting concepts and ideas
Procurement from suppliers
Basic engineering
Design of prototypes
Simulation and testing
Feedback from users
Integrated ramp-up and
production
Marketing
Transactions and distribution
User service
Sonera (the leading Finnish wireless carrier) uses the web to monitor customers’ activities and lifestyle needs
Dell uses the web to coordinate production with vendors. Cisco puts its sales-and-inventory tracking system on
the web to coordinate efforts with suppliers
Maritime Telephone and Telegraph uses a knowledge oriented development process for storing information
(specifications, projections, etc.). Nortel Networks has development teams share ideas and documents on private
web sites. P&G set up private sites to link engineers and researchers to draw “lightbulb moments”
Ford is using the Internet to support CAD-CAM-CAE applications to design cars collaboratively with partners
Yahoo! puts early versions of their new services on-line for internal use only, allowing trials and tests to
expose technical flaws and soliciting suggestions for improved functionality
Marriott solicits guests’ reviews over the Internet. Amazon.com solicits users’ reviews to pass along to
potential customers
Zara uses the web to deliver fashion changes as fast as their customers demand them
20th Century Fox uses the Internet to market films and target and customize advertising
CarDirect.com allows customers to shop and purchase automobiles online. General Motors uses the Internet to
link design centers with factory floors and dealerships to coordinate their work activities
Boeing offers airlines web-based service that allows them access to technical information and private chat areas
for discussing maintenance issues. Whirlpool is building net-linked appliances, for instance refrigerators that
can automatically order food or machine settings that adjust settings for specific stains

ject variables. Tracing the impact of how specific Inter-
net attributes affect specific R&D activities enables us
to assess the importance of these relationships. I invoke
and adapt Clark (Clark and Fujimoto, 1991; Wheel-
wright and Clark, 1992) and Kessler (Kessler and Bierly,
2001; Kessler and Chakrabarti, 1996) to propose the fol-
lowing three dimensions:
1. Process speed: Innovation speed is the time elapsed
between (a) initial development, including the con-
ception and definition of an innovation, and (b) ulti-
mate commercialization, which is the introduction of
a new product into the marketplace. Thus, the concept
of innovation speed refers to accelerating activities
from the first spark to the final product, including
activities that occur throughout the product-develop-
ment process.
2. Project efficiency: Efficiency is a function of the rela-
tive cost of development, defined as the total financial
requirements and associated human resources needed
to complete the project as compared to the scope, size,
and objectives of the project.
3. Product quality: Product quality, or its “fitness of use”
is the degree to which it satisfies customer require-
ments relative to the scope, size, and objectives of
the project.
The outcome of this modeling process yields a 4 × 3
× 3 model with 36 discrete and testable relationships
represented by its cells. Table 3 graphically illustrates
this, with Internet attributes along its height, R&D pro-
cess stages its width, and R&D outcomes its depth.
From Table 3, we can explore each cell to deduce and
predict relationships for each type of knowledge flow in
an e-R&D networked process. Moreover, there is evi-
dence to suggest meaningful differences between
internal and external knowledge flows within an R&D
project as well as between memory-related knowledge
flows related to inter-project learning (Kessler et al.,
2001, 2000). Of course, a consideration of 108 relation-
ships, or even 36 relationships if one assumes away the
differences between knowledge-flow processes, is
beyond the scope and page constraints of this manu-
script. Notwithstanding, we can still derive some broad-
based predictions about how such e-R&D networks
might function.
In general, many of the Internet functions, such as
communication (by aiding in decision making), transfer
(by aiding in design processes), and access (by aiding
in inter-project learning), could facilitate an e-R&D pro-
cess. This potentiality exists by virtue of the character-
istics of the technology fitting the nature of the R&D-
oriented group process task requirements. However,
some functions may be more beneficial than others due
to the greater richness of information exchanges they
enable (e.g., chat ⬎ facsimile). R&D, given that its nat-
ure is to process ideas and technologies that are rela-
tively new to the focal organization, is more likely to be
better suited to richer channels of communication (Daft
and Lengel, 1984).
Hypothesis 3a. The Internet can be used to positively
affect the outcomes of the R&D process; richer functions
of the Internet will have a greater effect on the outcomes
of the R&D process.
Additionally, some functions may be better able to
facilitate one outcome more so than another. For
instance, chat and email (by enabling accelerated infor-
mation exchanges between remote teams and members),
912 E.H. Kessler / Technovation 23 (2003) 905–915
Table 3.
might speed up R&D-oriented group processes.
Examples of this would be FreeServe software, which
uses email to help its globally distributed teams of pro-
grammers work on problems together, and Geneva’s
“Grid Physics Network” that helps scientists collaborate
in real-time with other researcher (Hafner, 2001). Others,
such as business messaging (by increasing the use of
task and project management tools), might make the pro-
cesses less costly. For instance, McIvor et al. (2000)
reports that Internet technologies are being used to elim-
inate and augment R&D activities to improve part stan-
dardization and simplification as well as part exclusion.
Still others functions, such as extranet (by gaining part-
ner and user input), might help to produce higher quality
products. For example, Equity Marketing, the company
that designs many of the promotional products given
away by Burger King, has leveraged Internet-enabled
prototyping processes to send three-dimensional product
models to colleagues around the world to improve cus-
tomization and performance (Kirsner, 2001). Of course,
these advantages would be better leveraged by organiza-
tions rich in Internet-based competencies and impeded
by those possessing a poorer understanding and usage
of Internet functions. This is suggested by Maccoby
(2001) and Warner and Witzel (1999), who speak of the
growing new breed of technologically sophisticated and
network competent project managers.
Hypothesis 3b. The Internet has the potential to posi-
tively affect all outcomes of the R&D process; various
Internet functions will differentially affect different out-
comes depending on the fit between the functions’
characteristics and the outcomes’ demands.
We can also take a broad-based view of the Internet’s
effects on the R&D process and its different stages.
Table 2 provides numerous and diverse evidence, albeit
primarily case-based, to suggest that the Internet can be
3D e-R&D model.
applied to R&D activities and that specific stages or task-
sets can be isolated and identified as responsive to e-
R&D networks. However, it does not make distinctions
between stages that are critically impacted vs. stages that
are minimally impacted. In other words, we cannot
deduce from it the magnitude of leverage provided by
the Internet. Notwithstanding, some stages may indeed
be more elastic or responsive to e-R&D applications. For
instance, more responsive stages might include those
types of activities which are more information-intense
and that depend on more networked communication. It
also stands to reason that some stages of the R&D pro-
cess would be better facilitated by the application of
some Internet attributes as compared to other Internet
attributes. These activities could include design and
feedback, as evidenced by Sun’s Sun Community Source
License (SSCL) that leverages the Internet to promote
common-interest gated communities, and simulation and
testing, as evidenced by IBM’s “AlphaWorks” Internet-
based discussion forums (Sawhney and Prandelli, 2000).
Moreover, and even more specifically, a particular Inter-
net functionality (e.g., Interactive whiteboards) might
particularly well fit a particular R&D task (e.g., basic
engineering). These arguments combine to support finer-
grained, contingency relationships as compared to over-
arching main effects.
Hypothesis 3c. The Internet has the potential to posi-
tively affect all stages of the R&D process; various Inter-
net functions will differentially affect different stages
depending on the fit between the functions’ richness and
the stages’ information⫺intensity and networked⫺com-
munication requirements.
All in all, simultaneously examining the interaction of
all dimensions of the 3D e-R&D model provides for
some interesting albeit complex predictions on these
relationships. In general, we might expect that (a) some
 E.H. Kessler / Technovation 23 (2003) 905–915
attributes of the Internet more than other attributes (b)
will have a greater potential to positively affect some
outcomes of the R&D process more than other outcomes
(c) at some stages of the R&D process more than other
stages. Also, we must remember that (d) these relation-
ships might differ depending on the type of knowledge
flow to which the 3D e-R&D model is applied. Indeed,
the permutations of potential hypotheses are quite large.
For instance, one example would be that Transfer
(function) may be particularly well suited to facilitate a
speedier execution (outcome) of the design of prototypes
(stage), but only in internal knowledge flows (type) that
are already broadly familiar to relevant parties.
3. Summary and conclusion
This paper proposes a general knowledge-based
framework for understanding and testing the complex
interaction of Internet technology and R&D organization
and team processes. It identifies three distinct knowledge
flows and develops a three-dimensional e-R&D frame-
work for understanding and exploring how Internet-
driven networks effect these flows. A diverse and frag-
mented literature is reviewed and arguments are
developed that focus on several important issues per-
taining to an Internet-leveraged e-R&D process.
Specifically, the paper considers relationships between
Internet attributes, R&D activities, and R&D outcomes.
Several lists and tables are compiled and applied to
better understand these relationships, and research
hypotheses are derived and offered. This is a general
albeit necessary and important step in improving our
understanding of this growing area. The value added of
conceptual development and modeling the theoretical
context of e-R&D networks is especially significant
given the relatively embryonic and disconnected nature
of the field.
Of course, there is much work to be done to finetune
and empirically test this model. Hopefully, the foun-
dation elaborated in the paper will be useful in facilitat-
ing progress in this area, and will be continuously modi-
fied as scientifically collected data emerge to help bridge
the gap between e-R&D’s importance and its objective
understanding. Subsequent research could delve into
specific aspects of the model and develop and test spe-
cific parts of it. For example, in the area of virtual product
development teams, one might explore how the different
Internet attributes affect various stages of their R&D
process, and perhaps towards different strategic goals.
Also, testing may establish a contingent functionality of
the Internet across knowledge flows. Perhaps it is more
functional for external knowledge networks and less so
for memory-related ones. However, it is important that
these and related scholarly efforts maintain explicit links
to the larger conceptual framework to build toward a
collective understanding of this important phenomena.
913
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 E.H. Kessler / Technovation 23 (2003) 905–915 915

Eric H. Kessler is an Associate Professor of

Management in the Lubin School of Business
and Director of the Lubin Scholars and Leaders
Program at Pace University. He received his
Ph.D. in organization management from Rutgers
University. Dr. Kessler’s research has been
widely published in leading management and
technology journals and book series. His current
research focus is on decision making in organi-
zations, particularly as it applies to the manage-
ment of innovation and emerging technology.