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IT outsourcing - A source of innovation? Microeconometric evidence for Germany

  • Bertschek. Irene
  • Erdsiek, Daniel

Do firms sourcing out IT services redirect their resources to innovation activity? We attempt to answer this question by analysing a firm-level data set comprising 1453 firms from the German manufacturing and services sectors. Using different measures of IT outsourcing (ITO), the econometric estimations reveal a significant and U-shaped relationship between ITO and product innovation activity of manufacturing firms, and a significant and hump-shaped relationship between ITO and process innovation activity of services firms. A propensity score matching analysis takes account of reverse causality; the results underpin the relevance of ITO for services firms' realisation of process innovation.

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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 12-088.

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Date of creation: 2012
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Handle: RePEc:zbw:zewdip:12088
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  1. Flaig, Gebhard & Stadler, Manfred, 1994. "Success Breeds Success. The Dynamics of the Innovation Process," Empirical Economics, Springer, vol. 19(1), pages 55-68.
  2. Holger Görg & Aoife Hanley, 2008. "Services Outsourcing and Innovation: An empirical investigation," Kiel Working Papers 1417, Kiel Institute for the World Economy.
  3. Ohnemus, Jörg, 2010. "IT outsourcing and employment growth at the firm level," ZEW Discussion Papers 10-108, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. Peters, Bettina, 2005. "Persistence of Innovation: Stylised Facts and Panel Data Evidence," ZEW Discussion Papers 05-81, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  5. Laura Abramovsky & Rachel Griffith, 2006. "Outsourcing and Offshoring of Business Services: How Important is ICT?," Journal of the European Economic Association, MIT Press, vol. 4(2-3), pages 594-601, 04-05.
  6. Peukert, Christian, 2011. "External technology supply and client-side innovation," ZEW Discussion Papers 11-082, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  7. Ohnemus, Jörg, 2007. "Does IT Outsourcing Increase Firm Success? An Empirical Assessment using Firm-Level Data," ZEW Discussion Papers 07-087, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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