Research and development (R&D), refers to the part of a company's business plan that seeks to

gain knowledge to develop, design and enhance that company's products, services, technologies
or processes. Cohen L (at al).2011 states thet the National Science Foundation defines three
types of R&D as basic research, applied research, and development. Basic research is defined as
research that advances scientific knowledge but does not have specific commercial objectives,
although such investigation may be in the fields of present or potential interest to the company.
Development is the systematic utilization of the knowledge or understanding gained from
research toward the production of useful materials, devices, systems, or methods, including
design and development of prototypes and processes
According to Honsotia (2003) Companies should invest in research and development (R&D) to
create new and innovative products and add features to old products. R&D also connects various
parts of a company's strategy, such as marketing and cost reduction. Specifically, companies
should invest in R&D due to increased market participation, cost management benefits,
advancements in marketing abilities and trend matching.
A company can either use its internal R&D department or engage external consultants to carry
out its research. The are various advantages that a company can enjoy by engaging its internal
R&D department.
Firstly, according to Cohen L (at al).2011 internal consultants provide value to their parent
organizations through a unique insider-outsider relationship with the rest of the organization.
Although they are employees of the organization rather than external contractors, internal
consultants are still empowered to step back from the organizations internal operations. Thus
they are able to provide both an outside perspective and insider influence to the organization
Secondly, internal consultants have a better understanding of the organization and industry. They
understand the language and culture of the organization better. According to Honsotia (2003)
their deep knowledge of the organization make internal consultants very valuable, for instance, in
the implementation of strategic change trajectories or culture transformations; with managing
processes and projects; or integrating initiatives within the organization. In addition, internal

consultants have existing relationships with other employees within the organization, improving
their means and channels of communication.

According to Honsotia (2003) aalso, internal consultants have first-hand knowledge about the
organization. Internal consulting units are embedded in their parent organizations as a permanent
fixture, they have first-hand knowledge both around how the organization functions and about
the industry itself. While external consultants can gain similar knowledge, it requires far more
effort
.
Furthermore, internal advisors are usually cheaper in comparison with the most expensive
external consultants in the market, cost, expenses and resources can be tightly monitored and
controlled when an in-house staff conducts investigation.

Cooper and schindler (2011) state that most internal consulting teams remain an internally
focused team that, for instance, is tasked to improve the efficiency of the organization. However,
over the years some internal teams have improved their knowledge and expertise to such an
extent that they can also apply their skills beyond the organization

Agility is another advantage of internal research because working research firms requires
somewhat rigid guidelines and research requirements. Cooper and schindler (2011) state that
Companies using an internal marketing research department obtain built in agility to modify
research during the course of investigation. Internal marketing teams can also move at the pace
set by business needs.
Cooper and schindler (2011) state that speedy results is also another advantage of having an
internal marketing research departments as fast results. Instead of bringing third part consultancy

up to speed about a project and then waiting for the results, a company has in-house experts to
which it can turn for insights or data.
Another advantage of creating an internal marketing research departments is that the research
will be led by people who are experts in the particular needs of that business. Cooper and
schindler (2011) state that the employees of the business understand it`s everyday operations and
needs. In contrast, third party experts might not be familiar with how the business works, so they
might lack importance insights that could make their marketing research more effective. Also if a
company has proprietary information that would be damaging if leaked, using in-house experts
that it can monitor and control might be an prudent option.
Besides the above mentioned advantages , internal consultants have some limitation as explained
below.
According to Cohen L at al(2011) one of the greatest disadvantages that internal innovation
consultants face is the lack of outside expertise. Frequently, the primary problem that
organizations struggling in regard to innovation face is their lack of fresh perspective. Internal
consultants may find it challenging to look beyond the organizations current operations to find
this perspective.
Additionally, internal consultants have historically faced difficulty with sustainability. Because it
is so specialized, maintaining an internal consulting unit can be costly. Because they are not
essential to the organizations regular operations, internal consultants are often seen as
dispensable when cost cutting occurs, and they must continually justify their existence to upper
management. Cooper and schindler (2011) state that ambiguity around the ongoing value of
internal consulting units and uncertainty around the role they play in the organizations
operations mean that internal consultants often lack the authority that external consultants enjoy.
While difficulty with sustainability is a challenge that internal consultants face across the board,
the challenge is further aggravated by innovation consulting, since innovation is likewise often
viewed as non-essential to the organizations normal operations.
Cooper and schindler (2011) state that lack of expertise is another disadvantage of internal
market research department is that accompany might lack the expertise to foster an effective

staff. Marketing research is a complex undertaking, requiring deep knowledge of statistical

methods in marketing concepts. A small business might not have resources to fund such an
undertaking or to hire staff that could manage such a project. In this case hiring third party
experts to consult in case by case bases might make more sense.
On the other hand the firm can engage external consultancy in caring out business research and
development. There are various advantages the firm can enjoy by engaging external consultancy
as going to be explained below.
External consultants hold over internal consultants aid an organization in becoming more
innovative, so they are able to break down bureaucratic barriers far more easily. Cooper and
schindler (2011) state that External consultants also bring expertise to the table that internal
consultants may not possess. Because consultant firms, especially the larger ones, focus so
heavily on staying ahead of the curve in terms of thought leadership, they likely have a fresh
perspective on the industry that the organization lacks. Moreover, they possess have more indepth knowledge around competitors and industry performance, providing organizations
valuable benchmarking information.
Clients have more confidence in external consultants than internal consultants. External
consultants are seen as independent players, contrary to internal advisors who literally depend on
their own organization. Cooper and schindler (2011) state that this could possibly lead to a trust
issue between advisor and client, which is also essentially the employer. The function often
demands an inquisitive and firm hand, a role that external advisors frequently fulfill, and one
more difficult to fill by internal advisors. They possibly hold just as much expertise, but as an
employee at an organization it is conceivably harder for internal consultants to be independent or
to be considered more independent than for external advisors.

External consultants, regularly draw from a broader business perspective gained from their vast
experience with various clients, markets and sectors, and bring new ideas and best practices
along to clients. Especially, the ability to benchmark in respect of other parties is a big advantage
of external consultants.

In general, Jerome ,H, at al (2001) stated that many assume that external consultants have a
higher level of expertise and experience, largely because they are completely focused on their
consultancy role, and deal with multifaceted issues at various clients. Internal consultants
possibly miss certain industry knowledge, which external consultants have encountered in
previous assignments.

Lastly, external consultancy parties often have particularly the bigger players broader choice
when it comes to selecting the most suitable consultants for projects. Large firms have
international talent pools which they can source from, and, for certain assignments, can pick the
best people for the job. Organizations with internal consultants are usually limited to the talent
they have in-house.
However, external consultancy have limitations. First, because they are contracted on a projectby-project basis, it is more challenging for external consultants to create an organic environment
of innovative thinking. At the end of the day, the problem that many organizations face is finding
the time for employees to be innovative. Jerome ,H at al (2001) highlights that while external
consultants can help recruit talent, identify opportunities for innovation, and help organizations
reorganize to create a more innovative environment, it is far more of a challenge for them to help
organizations sustain that environment long-term.
Additionally, Jerome ,H at al.( 2001) states that external consultants, especially those in larger
firms, may not have sufficient knowledge of the industry and the organizations capabilities to
identify key opportunities for the organization to innovate. Because external consultants are not
embedded in any particular industry, unless they are niche firms that focus on a particular
industry, they likely have been away from the specifics and day-to-day activities of an industry
too long to thoroughly understand it. Thus they may not be in the position to push the industry
boundaries. Most external consultants do not contract industry experts, but simply use their
existing staff, limiting their industry perspective
In conclusion, consulting research allows the firms to determine from the actual decision maker
in an actual context, what factors dominate the decision . That information creates valuable

variance in the firm`s analysis. Hence, consulting research has the great potential to determine
how to simplify, which variables to include. The decision makers experience and ability to
interpret the results becomes an additional source of information. Thus the firm has the options
of either conducting its own research using its internal R&D department or engaging external
consultants.

REFERENCE

Cooper D,R and Schindler P,S. 2011. Business Research Methods 11th edition .Mcgraw hill
International edition. New York, United States Of America.
Cohen L (at al).2011 Research Methods In Education 7th edition. Routledge. USA.

Jerome ,H (at al). 2001. Contributions of academic research to industrial performance in

five industry sectors.
Hansotia,B,J. 2003. Bridging the research gap between marketing academics and
practitioners. J. Database Marketing Customer Strategy Management.