Innovation Offshoring, Institutional Context and Innovation Performance: A Meta‐Analysis

Abstract

Innovation offshoring (IO) has become a widespread management practice. Yet, evidence on the performance implications is inconsistent, and scattered across disciplines and contexts. We argue that the benefits firms can derive from IO depend on the institutional environment at home. Drawing on recent work on institutional theory in international business, we explore institutions that facilitate reverse knowledge transfer and/or institutional arbitrage with respect to innovation‐related activities. The results of our meta‐analysis that synthesizes evidence from 48 samples show that IO is related positively to innovation performance. As predicted, this relationship is moderated by differences in the institutional environments across countries. Specifically, when national innovation systems are weak at home, IO appears to enable institutional arbitrage strategy whereas Confucian cultures enable more effective reverse knowledge transfer. However, contrary to our expectations, the beneficial effects of IO appear to have diminished over time.

Meta‐Analytic Research in Management: Contemporary Approaches, Unresolved Controversies, and Rising Standards

“…Carnes et al () use MASEM to test their theorizing about key mediators while Sihag and Rijsdijk () and Karam et al () harness MASEM in different ways to show how different theoretical relationships compare when viewed together. Three studies (i.e., Maas et al, ; Rosenbusch et al, ; Wang et al, ) leverage external sources (e.g., World Bank) in MARA to investigate how country‐level factors shape important relationships, thereby testing hypotheses that might otherwise be cost prohibitive. Finally, Schommer et al () use MARA to show how important relationships changed over 60 years of researchers’ investigations.…”

“…Habersang et al (2019) leverage QMA to introduce a new theoretical typology that would have been difficult to identify using deductive methods, quantitative analysis, or single case studies. Carnes et al (2019) use MASEM to test their theorizing about key mediators while Sihag and Rijsdijk (2019) and Karam et al (2019) Maas et al, 2019;Rosenbusch et al, 2019;Wang et al, 2019) leverage external sources (e.g., World Bank) in MARA to investigate how country-level factors shape important relationships, thereby testing hypotheses that might otherwise be cost prohibitive. Finally, Schommer et al (2019) use MARA to show how important relationships changed over 60 years of researchers' investigations.…”

“…Rosenbusch et al () similarly provide a typical MARA example. They are interested in whether innovation offshoring is associated with innovation performance and the home‐country conditions that shape the size of this relationship.…”

“…Using six indicators of country-level discretion from Crossland and Hambrick (2011) that draw on multiple data sources, they again found support for their theorizing with respect to board independence and human capital but not board-member ownership. Rosenbusch et al (2019) similarly provide a typical MARA example. They are interested in whether innovation offshoring is associated with innovation performance and the home-country conditions that shape the size of this relationship.…”

Advancing Theory with Review Articles

“…Data for these moderators may come from the studies under review (e.g., study design, operationalization of constructs, sample characteristics) or may be collected from external sources (e.g., country‐level data that correspond to the primary study’s national research setting). For example, Rosenbusch and her colleagues (), noting inconsistencies in the body of empirical evidence linking innovation offshoring and innovation performance, advance theory by establishing country‐level differences in the institutional environment as boundary conditions to the relationship.…”