Offshoring and Home Country R&amp;D

Karpaty, Patrik; Tingvall, Patrik Gustavsson

doi:10.1111/twec.12226

Cited by 12 publications

(12 citation statements)

References 67 publications

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“…This predominantly negative association suggests that R&D and off‐shoring act as substitute rather than complementary factors. A similar result is found in Karpaty and Tingvall (), who argue that off‐shoring is mainly pursued for cost minimization purposes. Another explanation for the negative impact of off‐shoring on R&D is that the increasing international fragmentation of production reduces plant‐level economies of scale (Barba Navaretti and Falzoni ) and/or minimizes feedback of technical information from foreign plants to domestic research labs (Naghavi and Ottaviano ).…”

Section: Econometric Resultssupporting

confidence: 84%

Off‐Shoring, Specialization and R&D

Bournakis

Vecchi

Venturini

2016

Review of Income and Wealth

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This paper investigates whether off‐shoring promotes technological specialization by reallocating resources towards high‐tech industries and/or stimulating within industry R&D. Using data for the USA, Japan and Europe, our results show that material off‐shoring promotes high‐tech specialization through input reallocation between sectors, while service off‐shoring favors technologically advanced production by increasing within‐industry productivity, mainly via its positive impact on R&D. Conversely, we find that the increasing fragmentation of core production tasks, captured by narrow off‐shoring, has adverse effects on technological specialisation, which suggests that this type of off‐shoring is mainly pursued for cost‐reduction motives.

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Section: Econometric Resultssupporting

confidence: 84%

Off‐Shoring, Specialization and R&D

Bournakis

Vecchi

Venturini

2016

Review of Income and Wealth

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“…In contrast to the above results, there is also further evidence regarding potential negative effects of offshoring on firm innovativeness: For instance, Karpaty and Gustavsson-Tingvall (2015) reported negative effects of offshoring on the level of R&D investments in Swedish companies over the period 1997-2005, particularly when shifting business functions to regions such as North America, Oceania and Europe (excluding the former EU-15). 6 The authors explain the observation of negative direct effects by a partial or full shift in R&D departments, which may be associated with good human capital endowment in receiving regions and the presence of scale economies.…”

Section: Literature Reviewmentioning

confidence: 60%

Section: Literature Reviewmentioning

confidence: 76%

Is There a Curse of Relocation? Analysing the Causal Link Between Offshoring and the Innovation Performance of (Small) Firms

Mitze

Kreutzer

2015

Bulletin of Econ Res

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We analyse the empirical link between offshoring activities and different dimensions of innovation performance at the firm-level. In order to identify causal effects running from offshoring to innovation, we use a quasi-experimental comparison group approach by means of (conditional) difference-in-difference estimations applied to German establishment-level data for firms that conducted offshoring activities in the period 2007-13. We find that the international relocation of business functions has a negative impact on the firms' propensity to be innovative in terms of product and process innovations as well as product improvements. While for larger firms the reduction in process innovations is most striking, potentially due to a lack of resources, stagnation in expertise and a reduction in intra-organizational learning-by-doing associated with the relocation of some business activities, for small and medium-sized enterprises we particularly observe a reduction in product innovations after the offshoring activity has taken place. When interpreting this 'pessimistic' picture on the link between offshoring and the innovation performance of firms, the reader should note that our findings for German establishments have to be assessed through the lens of a global economy in economic recession after 2008, which may have intensified the negative impact of offshoring on the firms' innovation performance.

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“…He finds that importing inputs is associates with a specialization in high-skill intensive activities such as the production of new goods, improvements of product quality and, to a lesser extent, R&D and technology adoption. The linkage between offshoring and R&D in the home country is also investigated by Karpaty and Tingvall (2011) for Swedish multinational firms. They find that offshoring has a negative effect on R&D intensity of Swedish firms at home.…”

Section: The Home Country Effects Of Foreign Direct Investment and Ofmentioning

confidence: 99%

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

et al. 2014

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. A strong innovation performance based on R&D, product development and the implementation of advanced production technologies is key for the long-term competitiveness of European economies. This study investigates the effects of production offshoring on R&D and innovation activities of the firm in the home country. The analysis is based on a dataset of more than 3000 manufacturing firms from seven European countries. We employ propensity score matching to compare R&D and innovation activities of firms which have offshored production activities in a previous period to a control group of non-offshoring firms. The analysis finds no negative effect of production offshoring on innovation and technological capabilities of firms in the home country. On contrary, offshoring firms spend significantly more on R&D or product design, and invest more in process innovation than non-offshoring firms. These results support a view on internationalisation of firms that regards offshoring as a strategy of international expansion, and not a passive reaction of firms to a loss of their competitiveness. Our results indicate that this expansion goes hand in hand with innovation and process modernization at home. Terms of use: Documents in Keywords FIW-Research Reports 2013/14Abstract 01

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Offshoring and Home Country R&D

Cited by 12 publications

References 67 publications

Off‐Shoring, Specialization and R&D

Off‐Shoring, Specialization and R&D

Is There a Curse of Relocation? Analysing the Causal Link Between Offshoring and the Innovation Performance of (Small) Firms

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

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