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A Tale of Two Literatures: Transaction Cost and Property Rights in Innovation Outsourcing

Nishaal Gooroochurn () and Aoife Hanley
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Nishaal Gooroochurn: Nottingham University Business School

Occasional Papers from Industrial Economics Division

Abstract: This paper investigates the relative importance of property rights (PR) and transactions cost (TC) factors in driving the decision of firms to outsource innovation. The TC literature explains a small part of outsourcing decisions (cost saving motives) while the PR literature deals with revenue maximisation. Using data for over 8,000 firms from the UK Community Innovation Survey, we find that PR variables dominate over TC variables. Our results suggest that the decision to outsource innovation is mostly driven by the ability of firms to control information leakages, less so by cost motives.

Keywords: transaction cost; property rights; innovation (search for similar items in EconPapers)
JEL-codes: L2 O3 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-com, nep-cse, nep-ent, nep-ino and nep-mic
Date: 2006
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