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Outsourcing, Offshoring and Innovation: Evidence from Firm-level Data for Emerging Economies

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  • Ursula Fritsch
  • Holger Görg

Abstract

It is striking that by far the lion’s share of empirical studies on the impact of outsourcing on firms considers industrialized countries. However, outsourcing by firms from emerging economies is far from negligible and growing. This paper investigates the link between outsourcing and innovation empirically using firm-level data for over 20 emerging market economies. We find robust evidence that outsourcing is associated with a greater probability to spend on research and development and to introduce new products and upgrade existing products. The effect of offshoring on R&D spending is significantly higher than the effect of domestic outsourcing. However, only domestic outsourcing increases the probability to introduce new products. We also show that the results crucially depend on the level of protection of intellectual property in the economy. Firms increase their own R&D effort in the wake of outsourcing only if they operate in an environment that intensively protects intellectual property

Suggested Citation

  • Ursula Fritsch & Holger Görg, 2013. "Outsourcing, Offshoring and Innovation: Evidence from Firm-level Data for Emerging Economies," Kiel Working Papers 1861, Kiel Institute for the World Economy.
    • Handle: RePEc:kie:kieliw:1861
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    File URL: https://www.ifw-members.ifw-kiel.de/publications/outsourcing-offshoring-and-innovation-evidence-from-firm-level-data-for-emerging-economies/Outsourcing%20offshoring%20and%20innovation%20Goerg%20Fritsch.pdf
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    More about this item

    Keywords

    outsourcing; offshoring; innovation; emerging economies;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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