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The effects of offshore production on onshore innovation: Evidence from Japanese multinationals

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  • Yamashita, Nobuaki
  • Yamauchi, Isamu

Abstract

This paper examines a largely unexplored channel of the effects of offshore production on onshore (domestic) innovation performance. We combine a comprehensive dataset mapping the global operations of Japanese multinational firms with patent statistics to measure innovation. The study finds that increased offshore production have little effects on onshore innovation performance once properly correcting a simultaneity bias. Furthermore, we find some weak evidence of increased offshore production downgrades the quality of innovation, measured by citations. Consistent with other studies, we find that an increase in overseas R&D is the main driver of innovation creation for multinational firms.

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  • Yamashita, Nobuaki & Yamauchi, Isamu, 2019. "The effects of offshore production on onshore innovation: Evidence from Japanese multinationals," Research Policy, Elsevier, vol. 48(9), pages 1-1.
    • Handle: RePEc:eee:respol:v:48:y:2019:i:9:23
    DOI: 10.1016/j.respol.2019.103836
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    2. 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.
    3. Jiancai Pi & Xinyi Liu, 2023. "Urban bias and multinational firms," Scottish Journal of Political Economy, Scottish Economic Society, vol. 70(1), pages 101-114, February.
    4. Ito, Keiko & Ikeuchi, Kenta & Criscuolo, Chiara & Timmis, Jonathan & Bergeaud, Antonin, 2023. "Global value chains and domestic innovation," Research Policy, Elsevier, vol. 52(3).
    5. 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.
    6. Tojeiro-Rivero, Damián, 2022. "What effect does the aggregate industrial R&D offshoring have on you? A multilevel study," Journal of International Management, Elsevier, vol. 28(2).
    7. Ito, Keiko & Ikeuchi, Kenta & Daiko, Taro, 2021. "Global knowledge flow and Japanese multinational firms’ offshore R&D allocation and innovation," Japan and the World Economy, Elsevier, vol. 59(C).
    8. 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.
    9. Jiancai Pi & Xinyi Liu, 2024. "Pollution control and multinational firms," International Journal of Economic Theory, The International Society for Economic Theory, vol. 20(1), pages 3-27, March.

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