Organization of R&D outsourcing: Asymmetric cross‐effects between locations

Abstract

When companies acquire R&D from external national providers, would they benefit if they also acquired knowledge from foreign providers? And the other way around? These questions are important for the organization of firm knowledge‐based activies and R&D governance. In this paper, we try to answer these questions by empirically examining the cross‐effects of international and national R&D outsourcing to generate innovation. Using a panel database of about 10,000 Spanish firms, we show that there is asymmetry in the effectiveness of the combined adoption of R&D outsourcing locations: international R&D outsourcing reinforces national R&D outsourcing, but national outsourcing does not reinforce international outsourcing. Therefore, the order of adoption matters; that is, on average, companies are more innovative if they acquire R&D first from external domestic providers and afterwards from foreign providers. We also find that the mechanism for these effects is related to organizational and management changes in sharing responsibilities and decision‐making.