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

María García-Vega and Elena Huergo ()

No 2018-10, Discussion Papers from University of Nottingham, GEP

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)
New Economics Papers: this item is included in nep-bec, nep-cse, nep-ino, nep-knm, nep-sbm and nep-tid
Date: 2018
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Journal Article: The role of international and domestic R&D outsourcing for firm innovation (2019) Downloads
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