If you met an engineer in a R&D department some years ago, he was supposed to be an employee of the firm. However, today, as firms have started to contract out there is an increasing number of high-skilled contractors working side by side with employees in core areas of the firm, e.g. in R&D. A reason which is often cited for this development is the flexibility advantage of using contractors. However, high-skilled contractors can also be a valuable source of new know-ledge and innovation. They can support a firm by recognizing technological trends, absorbing new knowledge and generating innovative products. In this paper we would like to illustrate how contractors can be an important knowledge source and what processes underlie the integration of the contractors’ knowledge. Our paper is based on empirical studies from a long-term research project funded by the German Federal Ministry of Research and Education.
