Corporate decision-making in R&D outsourcing and the impact on internal R&D employment intensity

Abstract

This paper aims to assess whether firms' strategies of R&D outsourcing determine changes in their internal R&D employment intensity. Four strategic decisions are investigated: to start, increase, decrease or stop outsourcing. It is found that internal R&D employment intensity decreases when firms decide to start or to increase R&D outsourcing. However, this finding hides important differences according to the type and location of the contractor.Starting to outsource to research centers in the proper region seems to decrease internal R&D employment intensity, whereas the opposite is true in case of outsourcing to firms and universities outside the proper region.

Foreign Subsidiaries and Technology Sourcing in Spain

“…Our results do not support the idea that R&D outsourcing is driven by the lack of in-house R&D and technical expertise (Teirlinck et al, 2010). In contrast to Schmiedeberg's results, in our sample, complementary is weaker for domestic cooperation for innovation.…”

“…We include variables which, according to the literature, influence cooperation for innovation and R&D outsourcing in the domestic and international market. Though the literature on R&D outsourcing is still relatively scarce and mostly concentrates on ICT (Rilla and Squicciarini, 2011;Teirlinck et al, 2010), we also discuss some previous results concerning predictors of R&D outsourcing.…”

“…At the same time, the spatial network of the group can be important in overcoming friction costs of geographical distance in the search for partners in other locations. Some evidence suggests that firms pertaining to a group are more likely to cooperate for innovation or outsource R&D because they may be able to use their internal networks to recruit and supervise external R&D partners or providers of technology (Molero and Heijs, 2002;Segarra-Blasco and Arauzo-Carod, 2008;Teirlinck, et al, 2010). A different technology sourcing behaviour of MNE subsidiaries might not be due to the foreign ownership per se, but rather the fact that those firms operate within a company network (Pfaffermayr and Bellak, 2002).…”

“…However, other studies find complementarities or substitution effects in some specific sectors or concerning some types of partners, and not others (Carboni, 2010;Miotti and Sachwald, 2003;Molero et al, 2009). Some studies assume that R&D outsourcing is driven by the lack of in-house R&D and technical expertise (Teirlinck et al, 2010). This implies that R&D outsourcing is a substitute for internal R&D. One of the few articles comparing different forms of technology sourcing finds that internal R&D is more complementary to R&D cooperation while the association between internal R&D and R&D contracting is weaker (Schmiedeberg, 2008).…”

Embracing Open Innovation to Acquire External Ideas and Technologies and to Transfer Internal Ideas and Technologies Outside

“…In the outside-in process, studies found that a firms' main external sources are customers (Grimpe and Sofka, 2009), suppliers (Schiele, 2010), competitors (Lim et al, 2010), and research institutes (Fabrizio, 2009). However, firms need to have internal R&D capabilities and complementary assets for a successful outside-in process (Teirlinck et al, 2010). Organizational culture is crucial for firms to successfully benefit from external sources of innovation as the NIH attitude is a key barrier to their success (Laursen and Salter, 2006;West and Gallagher, 2006;Laursen and Salter, 2014).…”