The Impact of Innovation Off-shoring on Organizational Adaptability

Elisabeth Baier, Christian Rammer and Torben Schubert ()
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Torben Schubert : CIRCLE, Lund University, Sweden and Fraunhofer Institute for Systems and Innovation Research, Germany, Postal: CIRCLE, Lund University, PO Box 117, SE-22100 Lund, Sweden

No 2013/44, Papers in Innovation Studies from Lund University, CIRCLE - Centre for Innovation Research

Abstract: We analyze the effects of captive off-shoring of innovation activities on the firms’ ability to adapt its organizational structures. Basing our arguments on complexity theory, we use three consecutive waves of the German part of the Community Innovation Survey to test our hypotheses. We find an inverted u-shape of innovation off-shoring on the effectiveness of organizational adaptability, implying an optimal threshold value of innovation off-shoring. This value is 11% for the share of off-shored R&D, 15% for downstream innovation activities such as local market adaptation, and 34% for design activities. We also analyze several contingency variables. In particular we show that the costs of innovation off-shoring in terms of reduced organizational adaptability are exacerbated by a strong focus on R&D and a strong embeddedness in on-shore networks. Smaller firms find it easier to deal with the management complexity induced by geographical dispersion of innovation activities because of their greater flexibility.

Keywords: Internationalization; Off-Shoring; Innovation; R&D; Organizational Adaptation; Organizational Adaptability (search for similar items in EconPapers)
JEL-codes: L23 L25 M16 O32 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2013-12-20
New Economics Papers: this item is included in nep-cse, nep-ino, nep-knm and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: The impact on innovation off-shoring on organizational adaptability (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:lucirc:2013_044

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