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

García-Vega, María and Elena Huergo ()

Journal of Economic Behavior & Organization, 2019, vol. 157, issue C, 775-792

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.

Keywords: R&D outsourcing; Transaction cost economics; Innovation; International versus domestic outsourcing; Exporters (search for similar items in EconPapers)
JEL-codes: L25 O32 (search for similar items in EconPapers)
Date: 2019
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Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

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