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Technological Capabilities, Technological Dynamism and Innovation Offshoring

Listed author(s):
  • Schubert, Torben

    ()

    (CIRCLE, Lund University)

  • Baier, Elisabeth

    ()

    (Hochschule für Wirtschaft, Technik und Kultur (HWTK))

  • Rammer, Christian

    ()

    (Centre for European Economic Research (ZEW))

In this paper we analyze the conditions under which firms decide to offshore innovation. We consider the role of internal technological capabilities and technological dynamism in the firm environment, distinguishing speed and uncertainty of technological change. Using unique data from the German Innovation Survey we find that while high speed of technological change tends to drive innovation offshoring, high uncertainty about future technology developments results in more innovation offshoring only for firms with low internal technological capabilities. Firms with high technological capabilities instead are less likely to offshore innovation when uncertainty is high. We argue that these differences in offshoring behaviour reflect differing strategic objectives. We show that for firms with low technological capabilities asset augmentation is more important while for firms with high technological capabilities asset exploitation is more important. When faced by high technological uncertainty firms with low technological capabilities offshore innovation strategically in order to reduce uncertainty by augmenting their asset base. For firms with high technological capabilities asset augmentation is less important. When faced by high technological uncertainty, they prefer to innovate onshore in order to keep stronger control of their key assets.

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Paper provided by Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy in its series Papers in Innovation Studies with number 2016/22.

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Length: 31 pages
Date of creation: 25 Jul 2016
Handle: RePEc:hhs:lucirc:2016_022
Contact details of provider: Postal:
CIRCLE, Lund University, PO Box 117, SE-22100 Lund, Sweden

Phone: +46 (0) 46 222 74 68
Web page: http://www.circle.lu.se/

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