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The effects of production offshoring on R&D and innovation in the home country

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  • Dachs, Bernhard
  • Ebersberger, Bernd
  • Kinkel, Steffen
  • Som, Oliver

Abstract

We investigate the effects of production offshoring on the innovation activities of manufacturing firms in the home country. The analysis is based on a dataset of more than 3000 manufacturing firms from seven European countries. We find that offshoring firms on average employ a higher share of R&D and design personnel, introduce new products more frequently to the market, and invest more frequently in advanced process technologies compared to non-offshoring firms. Concerns that offshoring may hurt innovation because of the lost links between production and product development are not supported by the evidence.

Suggested Citation

  • Dachs, Bernhard & Ebersberger, Bernd & Kinkel, Steffen & Som, Oliver, 2014. "The effects of production offshoring on R&D and innovation in the home country," Discussion Papers "Innovation Systems and Policy Analysis" 39, Fraunhofer Institute for Systems and Innovation Research (ISI).
    • Handle: RePEc:zbw:fisidp:39
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    Cited by:

    1. Mazzola, Erica & Bruccoleri, Manfredi & Perrone, Giovanni, 2019. "The curvilinear effect of manufacturing outsourcing and captive-offshoring on firms' innovation: The role of temporal endurance," International Journal of Production Economics, Elsevier, vol. 211(C), pages 197-210.
    2. Alessandro Bramucci & Antonello Zanfei, 2015. "The governance of offshoring and its effects at home. The role of codetermination in the international organization of German firms," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(2), pages 217-244, June.
    3. Mirabelle Muuls & Rajneesh Narula & Lucia Piscitello & Antonello Zanfei, 2023. "Global value chains: antecedents and new perspectives," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 50(1), pages 19-23, March.
    4. Gerda Dewit & Dermot Leahy, 2020. "Thinking inside the box: Optimal policy towards a footloose R&D‐intensive firm," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(6), pages 1921-1942, December.
    5. Lorena D’Agostino, 2015. "The neglected effects of R&D captive offshoring in emerging countries on the creation of knowledge at home," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(1), pages 61-91, March.
    6. Baum, Christopher F & Lööf, Hans & Stephan, Andreas & Viklund-Ros, Ingrid, 2020. "The impact of offshoring on innovation and productivity: Evidence from Swedish manufacturing firms," Working Paper Series in Economics and Institutions of Innovation 486, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    7. Ioannis Bournakis & Michela Vecchi & Francesco Venturini, 2018. "Off‐Shoring, Specialization and R&D," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(1), pages 26-51, March.
    8. Christopher F. Baum & Hans Lööf & Andreas Stephan & Ingrid Viklund-Ros, 2020. "The impact of offshoring on productivity and innovation: Evidence from Swedish manufacturing firms," Boston College Working Papers in Economics 1014, Boston College Department of Economics, revised 19 Apr 2021.
    9. Christopher F. Baum & Hans Lööf & Andreas Stephan & Ingrid Viklund‐Ros, 2022. "The impact of offshoring on technical change: Evidence from Swedish manufacturing firms," Review of International Economics, Wiley Blackwell, vol. 30(3), pages 796-818, August.
    10. Svend Greniman Andersen, 2020. "Offshoring Brains? Evidence on the Complementarity between Manufacturing and R&D in Danish Firms," Scandinavian Journal of Economics, Wiley Blackwell, vol. 122(4), pages 1315-1342, October.

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    More about this item

    Keywords

    offshoring; R&D; home country effects; investment; product innovation; process innovation;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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