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The role of international and domestic R&D outsourcing for firm innovation

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  • María García-Vega
  • Elena Huergo
Abstract
Firms are increasingly outsourcing their high-tech services. Theory suggests that R&D outsourcing allows firms to specialize in core knowledge-intensive tasks, thereby increasing innovation, but R&D outsourcing may also undermine internal capabilities. Our goal is to empirically assess the relative importance of these two possibilities, distinguishing between national and international R&D outsourcing and firms’ exporting status. We examine R&D purchases of more than 10,000 Spanish firms for the period 2004-2014. We show that R&D outsourcing improves firm innovation. Product innovation rises mostly with domestic outsourcing, while process innovation increases with both domestic and international R&D outsourcing. In addition, we find that international outsourcing provides an extra premium, mostly for exporters. Our results contribute to a better understanding of how firms organize the production of knowledge and innovation.

Suggested Citation

  • María García-Vega & Elena Huergo, 2018. "The role of international and domestic R&D outsourcing for firm innovation," Discussion Papers 2018-10, University of Nottingham, GEP.
    • Handle: RePEc:not:notgep:18/10
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    2. Mukherjee, Debmalya & Kumar, Satish & Pandey, Nitesh & Lahiri, Somnath, 2023. "Is offshoring dead? A multidisciplinary review and future directions," Journal of International Management, Elsevier, vol. 29(3).
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    6. Sommer, Daniel & Bhandari, Krishna Raj, 2022. "Internationalization of R&D and Innovation Performance in the Pharma Industry," Journal of International Management, Elsevier, vol. 28(3).
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    8. Agata Marcysiak, 2020. "Conditions for the functioning of outsourcing in enterprises," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(1), pages 539-554, September.
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    More about this item

    Keywords

    R&D outsourcing; transaction cost economics; innovation; international versus domestic outsourcing; exporters.;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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