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

María García-Vega and 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.

In this Nottingham School of Economics working paper, published in the Journal of Economic Behaviour and Organization, Maria Garcia-Vega and Elena Huergo empirically investigate whether R&D outsourcing increases innovation, distinguishing between national and international R&D outsourcing and firms’ exporting status. Using firm-level data on R&D purchases of more than 10,000 Spanish firms for the period 2004–2014. The authors 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, they find that international outsourcing provides an extra premium, mostly for exporters. The results contribute to a better understanding of how firms organize the production of knowledge and innovation.

Journal of Economic Behaviour and Organization, “The role of international and domestic R&D outsourcing for firm innovation”, by María García-Vega and Elena Huergo. https://doi.org/10.1016/j.jebo.2018.11.009

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