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Domestic R&D Employment Effects of Offshoring R&D Tasks: Some Empirical Evidence from Finland

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  • Ali-Yrkkö, Jyrki
  • Deschryvere, Matthias

Abstract

This study empirically explores whether R&D offshoring affects the domestic R&D employment at the firm level. Overall, the Finnish survey data suggest that the impact of R&D internationalization on domestic R&D employment depends on the mode of internationalization (in-house offshoring vs. offshore outsourcing vs. in-house expansion of R&D abroad). Moreover, manufacturing and service firms are found to be different when it comes to R&D internationalization and its domestic employment effects. In the manufacturing sector, especially in-house offshoring of R&D has a significant negative impact on the plan to increase R&D employment. But the relationship between the in-house expansion of R&D abroad and domestic R&D employment turns out to be complementary. In the service sector, it is in the first place offshore outsourcing of R&D that has a significant negative impact on the plan to increase R&D employment. A final result supports the view that R&D does not always follow production but that a strong location link between production and R&D does have a significant negative effect on the domestic R&D employment.

Suggested Citation

  • Ali-Yrkkö, Jyrki & Deschryvere, Matthias, 2008. "Domestic R&D Employment Effects of Offshoring R&D Tasks: Some Empirical Evidence from Finland," Discussion Papers 1163, The Research Institute of the Finnish Economy.
  • Handle: RePEc:rif:dpaper:1163
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    References listed on IDEAS

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    1. Hans Gersbach & Armin Schmutzler, 2011. "Foreign direct investment and R&D-offshoring," Oxford Economic Papers, Oxford University Press, vol. 63(1), pages 134-157, January.
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    3. Leiponen, Aija, 2008. "Is Service Innovation Different?," Discussion Papers 1151, The Research Institute of the Finnish Economy.
    4. Pol Antràs & Luis Garicano & Esteban Rossi-Hansberg, 2006. "Offshoring in a Knowledge Economy," The Quarterly Journal of Economics, Oxford University Press, vol. 121(1), pages 31-77.
    5. Richard B. Freeman, 2006. "Does Globalization of the Scientific/Engineering Workforce Threaten U.S. Economic Leadership?," NBER Chapters,in: Innovation Policy and the Economy, Volume 6, pages 123-158 National Bureau of Economic Research, Inc.
    6. Pol Antràs, 2005. "Incomplete Contracts and the Product Cycle," American Economic Review, American Economic Association, vol. 95(4), pages 1054-1073, September.
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    8. Ito, Banri & Wakasugi, Ryuhei, 2007. "What factors determine the mode of overseas R&D by multinationals? Empirical evidence," Research Policy, Elsevier, vol. 36(8), pages 1275-1287, October.
    9. ITO Banri & TOMIURA Eiichi & WAKASUGI Ryuhei, 2007. "Dissecting Offshore Outsourcing and R&D: A Survey of Japanese Manufacturing Firms," Discussion papers 07060, Research Institute of Economy, Trade and Industry (RIETI).
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    11. Barbara Spencer, 2005. "International outsourcing and incomplete contracts," Canadian Journal of Economics, Canadian Economics Association, vol. 38(4), pages 1107-1135, November.
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    14. repec:hrv:faseco:4784031 is not listed on IDEAS
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    More about this item

    Keywords

    globalisation; internationalisation; outsourcing; offshoring; employment; tutkimus ja kehitys; spillovers; relocation; domestic; home-country;

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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