Determinants of internal and external R&D offshoring: evidence from Spanish firms

Abstract

This paper analyzes the determinants of R&D offshoring of Spanish firms using information from the Panel of Technological Innovation. We find that being an exporter, international technological cooperation, continuous R&D engagement, applying for patents, being a foreign subsidiary, and firm size are factors that positively affect the decision to offshore R&D. In addition, we find that a lack of financing is an obstacle relatively more important for independent firms than for firms that belong to business groups. For these latter, we also obtain that the factors that influence the decision to offshore R&D differ depending on whether the firm purchases the R&D services within the group or through the market: a higher degree of importance assigned to internal sources of information for innovation as compared to market sources increases (decreases) the probability of R&D offshoring only through the group (market).JEL Classification: L24, O32.

Why say no to innovation? Evidence from industrial SMEs in European Union

“…Results from the applied methodology, in the case of EU industrial SMEs with a number of employees' between 50 and 249, suggest that lack of internal finance and little market competition do not stimulate enterprises to be innovative. On the other hand, high market competition is a driven force for innovation, which is all in accordance with the literature review and especially with the conclusions of Tamayo and Huergo (2017).…”

“…As banks are one of the logical funding sources for SMEs and their innovation projects, researchers pointing out that asymmetric and unconvincing information characterizing innovation projects also troubles their development and the accessibility to bank loans. In particular, lack of financing is an obstacle relatively more important and frequently met by independent and smaller enterprises than for enterprises that belong to business groups or international conglomerates (Tamayo and Huergo 2017). Other problems, related to the difficult funding are: intangible assets, which are not desired by banks for a collateral (Williamson 1987); high risk; high uncertainty; unclear metrics; scalability requirements, that foster predominantly information and technology projects, etc.…”

Determinants of R&D offshoring: firm-level evidence from a small open economy

“…Firms which offshore R&D are more knowledge-intensive, more productive and more integrated in international markets than firms with no offshoring of R&D. While firms with R&D offshoring are good performers, they are located in industries which are lagging behind the global technological frontier. Tamayo and Huergo (2017) find that the probability to offshore R&D is positively linked to firms' size, firms' engagement in exporting, international technological cooperation, foreign ownership, continuous engagement in R&D, and patent applications. Further, they examine the extent to which determinants of R&D offshoring differ for independent firms and for firms which are part of a group, focusing on access to finance and information management.…”

“…Existing evidence suggests that the propensity to outsource R&D internationally is higher for firms integrated in global production and innovation networks, i.e. exporters and foreign affiliates (García-Vega and Huergo 2011; Zuniga 2009, 2016;Tamayo and Huergo 2017).…”

“…While R&D offshoring has been initially associated with the internationalisation of R&D activities by multinational enterprises (Le Bas and Sierra 2002;Ambos 2005;Lewin et al 2009;Siedschlag et al 2013), over the past decade, indigenous firms, including small and medium sized enterprises have increasingly engaged in cross-border R&D activities (OECD 2008;Nieto and Rodríguez 2011;Tamayo and Huergo 2017).…”