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The role of international and domestic R&D outsourcing for firm innovation

García-Vega, María; Huergo, Elena


Elena Huergo


Firms are increasingly outsourcing their high-tech services. Theory suggests that R&D outsourcing allows firms to specialize in core knowledge-intensive tasks, thereby increasing innovation, but R&D outsourcing may also undermine internal capabilities. Our goal is to empirically assess the relative importance of these two possibilities, distinguishing between national and international R&D outsourcing and firms' exporting status. We examine R&D purchases of more than 10,000 Spanish firms for the period 2004-2014. We show that R&D outsourcing improves firm innovation. Product innovation rises mostly with domestic outsourcing, while process innovation increases with both domestic and international R&D outsourcing. In addition, we find that international outsourcing provides an extra premium, mostly for exporters. Our results contribute to a better understanding of how firms organize the production of knowledge and innovation.

Journal Article Type Article
Publication Date 2019-01
Print ISSN 0167-2681
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 157
Pages 775-792
APA6 Citation GarcĂ­a-Vega, M., & Huergo, E. (2019). The role of international and domestic R&D outsourcing for firm innovation. Journal of Economic Behavior and Organization, 157, 775-792. doi:10.1016/j.jebo.2018.11.009
Keywords R&D outsourcing; transaction cost economics; innovation; international versus domestic outsourcing; exporters JEL classification: L25; O32
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