An Empirical Assessment of the Effects of Trade in Innovative Tasks on Innovation Output

Productivity and offshoring innovative activities

“…These firms are more productive than other MNCs that only offshore their productive activities. Previous studies also suggest that, when it comes to international sourcing of innovation, captive offshoring is more common than offshore outsourcing (Tabrizy 2015), and it is more effective (Nieto and Rodrìguez 2011).…”

“…Despite the estimated gains from global sourcing of innovative tasks (Ceci and Masciarelli 2010;Kotabe et al 2007;Nieto and Rodrìguez 2011;Tabrizy 2015), only a small number of MNCs offshore their innovative activities. This is puzzling.…”

“…Also, given the cost of offhoring such activities, MNCs are more likely to internalize their offshore innovative activities via FDI (Tabrizy 2015). Thus, improvements in intellectual property rights and foreign ownership rules may increase the chance of a given country to become the destination for international innovative activities.…”

“…Also, Nieto and Rodrìguez (2011) suggest that the offshoring of R&D tasks may positively affect innovative performance of the firms, as measured by the propensity to innovate. Along with the gains in terms of the extensive margin of innovation output (i.e., whether a firm innovates), Tabrizy (2015) suggests that the offshoring of innovative tasks (e.g., R&D, design, and engineering services) may also contribute to the intensive margin of innovation, as measured by the share of innovative product sales in total turnover. 2 Despite the above motives and potential gains, only a small number of firms offshore their innovative tasks.…”

“…5 Since then, this literature has grown significantly. The most recent studies explore, at least, four areas of research: the determinants of global sourcing of innovative activities (e.g., Lewin et al 2009;Garcìa-Vega and Huergo 2011;Jensen and Pedersen 2012;Jabbour and Zuniga 2016;Danguy 2016;Tamayo and Huergo 2016), the potential gains (e.g., Kotabe et al 2007;Ceci and Masciarelli 2010;Nieto and Rodrìguez 2011;Castellani and Pieri 2013;Tabrizy 2015), the organizational aspects (e.g., Bardhan 2006;Lai et al 2009;Grimaldi et al 2010;Martinez-Noya et al 2012;Bertrand and Mol 2013), and the emerging global geography of innovation (e.g., Fifarek andVeloso 2010 andD'Agostino, Laursen, andSantangelo 2013).…”