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Too much or too little of R&D offshoring: The impact of captive offshoring and contract offshoring on innovation performance

  • Innovating firms may acquire foreign knowledge and improve their innovation performance by offshoring their R&D activities to their own foreign affiliates (captive offshoring) as well as by contracting out their R&D to external foreign parties (contract offshoring). This study examines the impact of both R&D offshoring strategies on innovation performance. Based on a panel dataset of 2421 R&D-active firms in Germany, we demonstrate that captive offshoring and contract offshoring differ fundamentally in their impact on firm innovation performance. At low degrees of offshoring, contract offshoring positively affects innovation performance and is preferable over captive offshoring. At larger degrees of offshoring, captive offshoring becomes more beneficial while contract offshoring is disadvantageous. Both offshoring strategies eventually harm innovation performance when excessively employed. Furthermore, the R&D offshoring-performance relationship is leveraged by R&D intensity, such that firms with a larger knowledge stock benefitInnovating firms may acquire foreign knowledge and improve their innovation performance by offshoring their R&D activities to their own foreign affiliates (captive offshoring) as well as by contracting out their R&D to external foreign parties (contract offshoring). This study examines the impact of both R&D offshoring strategies on innovation performance. Based on a panel dataset of 2421 R&D-active firms in Germany, we demonstrate that captive offshoring and contract offshoring differ fundamentally in their impact on firm innovation performance. At low degrees of offshoring, contract offshoring positively affects innovation performance and is preferable over captive offshoring. At larger degrees of offshoring, captive offshoring becomes more beneficial while contract offshoring is disadvantageous. Both offshoring strategies eventually harm innovation performance when excessively employed. Furthermore, the R&D offshoring-performance relationship is leveraged by R&D intensity, such that firms with a larger knowledge stock benefit stronger from both captive and contract offshoring.show moreshow less

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Metadaten
Author: Philip J. Steinberg, Diemo UrbigORCiD, Vivien D. ProcherORCiD
URL:http://dx.doi.org/10.1016/j.respol.2017.08.008
DOI:https://doi.org/10.1016/j.respol.2017.08.008
ISSN:1873-7625
Title of the source (English):Research Policy
Document Type:Scientific journal article peer-reviewed
Language:English
Year of publication:2017
Tag:Captive offshoring; Contract offshoring; Innovation; R&D intensity; R&D offshoring
Volume/Year:46
Issue number:10
First Page:1810
Last Page:1823
Faculty/Chair:Fakultät 5 Wirtschaft, Recht und Gesellschaft / FG ABWL, insbesondere empirische Unternehmensforschung und Transformation
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