The impact of R&amp;D offshoring on the home knowledge production of OECD investing regions

D’Agostino, Lorena M.; Laursen, Keld; Santangelo, Grazia D.

doi:10.5465/ambpp.2012.15692abstract

Cited by 9 publications

(13 citation statements)

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“…Song and Shin (2008) and Penner-Hahn and Shaver (2005) found that effective knowledge transfers require a sufficient 'absoipdve capacity' at corporate headquarters in order to utilize foreign know-how and R&D results. More recent work has found that reverse knowledge transfers from foreign R&D can generate spillovers to other firms in the home country (Criscuolo, 2009;D'Agostino et al, 2013). …”

Section: Multinational Firms and International Randd (Locations)mentioning

confidence: 97%

Academic Research Strengths and Multinational Firms' Foreign R&D Location Decisions: Evidence from R&D Investments in European Regions

et al. 2014

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Although an expanding literature on university-industry linkages has suggested that proximity to academia can increase the innovative performance of firms, the role of academic research in the R&D location choices of multinational firms has received surprisingly little attention. In this paper we analyze the extent to which academic research in host regions of EU-15 countries attracts R&D investments by multinational firms. We analyze the determinants of the location of 394 multinational R&D projects in NUTS-1 regions of EU-15 countries during the period 2003-08. We construct precise measures of the academic research strengths of regions from annual publication data from Thomson Reuters Web of Science. University publications are counted at the level of regions and science fields, and measure academic research relevant for investing firms by linking science fields to the industries in which firms are active. We find that the probability of R&D projects being located in a host region is positively affected by the host region's academic strength-after controlling for industry agglomeration, the technological strength of the region, R&D tax incentives, and other characteristics of host locations. Our results further suggest that a major mechanism through which academic research attracts foreign R&D is the supply of PhD graduates.

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Section: Multinational Firms and International Randd (Locations)mentioning

confidence: 97%

Academic Research Strengths and Multinational Firms' Foreign R&D Location Decisions: Evidence from R&D Investments in European Regions

et al. 2014

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“…regional) firms, represents an additional path along which the 'augmented' knowledge production function has recently been developed (e.g. Ponds et al, 2010;D'Agostino et al, 2013).…”

Section: Theoretical Backgroundmentioning

confidence: 99%

The production function of top R&D investors: Accounting for size and sector heterogeneity with quantile estimations

Montresor

Vezzani

2015

Research Policy

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Please cite this article in press as: Montresor, S., Vezzani, A., The production function of top R&D investors: Accounting for size and sector heterogeneity with quantile estimations. Res. Policy (2014), http://dx.Available online xxx JEL classification: D24 D21 O30 Keywords:Production function R&D Firm and sector heterogeneity a b s t r a c t This paper aims at showing how quantile estimations can make the analysis of the firm's production function better able to deal with the innovation implications of production. In order to do this, we provide evidence of how top world R&D investors differ in the production impact of their inputs and in their rate of technical change. We use the EU Industrial R&D Investment Scoreboard and carry out a quantile estimation of an augmented Cobb-Douglas production function for a panel of more than 1000 companies, covering the 2002-2010 period. The results of the pooled sample are contrasted with those obtained from the estimates for different groups of economic sectors. Returns to scale are bounded by the size of the firm, but to an extent that decreases with the technological intensity of the sector. The output return of knowledge capital is the largest, irrespective of firm size, but in high-tech sectors only. Elsewhere, physical capital is the pivotal factor, although with size variations. The investigated firms also appear different in their technical progress: embodied in mid-high and low/mid-low tech sectors, and disembodied in high-tech sectors.

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“…(1) Access to highly skilled talent pools in emerging economies, many of which are producing more PhD candidates that developed countries (Freeman, 2005;Lewin et al, 2009) (2) Lower cost of human capital in emerging economies, which is often one-fourth of the cost in developed countries (D'Agostino et al, 2013;Fifarek and Veloso, 2010) (3) Greater flexibility of technological capabilities by sourcing in different emerging economies (Li and Kozhikode, 2009;Manning et al, 2008) (4) Innovate closer to their product markets, which is especially important because the demand for various products is significantly different in emerging economies compared to advanced economies (Govindarajan and Ramamurti, 2011;Kuemmerle, 1999;Von Zedtwitz, 2004) (5) R&D collaborations with local emerging economy firms, which are catching up and specializing in technologies better suited to their markets (Buckley and Ghauri, 2004;Li and Kozhikode, 2008) (6) Host country policies that provide incentives such as tax benefits to advanced economy firms to locate R&D in emerging economies (Li and Kozhikode, 2009) Disadvantages (1) Weaker enactment and enforcement of intellectual property rights regime by emerging economies, which can make it easier for local firms to copy technology owned by advanced economy firms (Sanna-Radaccio and Veugelers, 2007) (2) Higher employee mobility, which further increases the risk of leakage and knowledge spillover in emerging economies (Meyer, 2004;Yang and Jiang, 2007) (3) Underdeveloped institutions and turbulent environments, which may make carrying out business activities including R&D harder in emerging economies (Hoskisson et al, 2000;Lamin and Ramos, 2016) (4) Differences in political, economic and societal environments between advanced and emerging economies, which could make it difficult to transfer tacit knowledge and increase overall operational complexity (Gassmann and Von Zedtwitz, 1999;Vahtera et al, 2017) (5) Presence of informal institutions such as corruption (Galang, 2012) makes it harder for advanced economy firms to coordinate and control their R&D activities in emerging economies (Sartor and Beamish, 2014) Table 1.…”

Section: Advantagesmentioning

confidence: 99%

Does R&D offshore outsourcing improve innovation in vendor firms from emerging economies? A study of biopharmaceutical industry in India

Thakur‐Wernz

Wernz

2020

IJOEM

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PurposeWhile the phenomenon of R&D offshoring has become increasingly popular, scholars have mostly focused on R&D offshore outsourcing from the point of view of the client firms, who are often from an advanced country. By examining vendor firms, in this paper the authors shift the focus to the second party in the dyadic relationship of R&D offshore outsourcing. Specifically, the authors compare vendor firms with nonvendor firms from the same emerging economy and industry to look at whether vendor firms from emerging economies can improve their innovation performance by learning from their clients. The authors also look at the role of depth and breadth of existing technological capabilities of the vendor firm in its ability to improve its innovation performance.Design/methodology/approachThis study is based on firm-level data from the Indian biopharmaceutical industry between 2005 and 2016. The authors use the Heckman two-stage model to control for self-selection by firms. The authors compare the innovation performance of vendor firms with nonvendor biopharmaceutical firms (group vs nongroup analysis) as well as innovation performance across vendor firms (within group comparison).FindingsThe authors find that, compared to nonvendor firms, R&D offshore outsourcing vendor firms from emerging economies have higher innovation performance. The authors argue that this higher innovation performance among vendor firms is due to learning from their clients. Among vendor firms, the authors find that the innovation gains are contingent upon the two factors of depth and breadth of the vendor firms' technological capabilities.Research limitations/implicationsThis paper makes three contributions: First, the authors augment the nascent stream of research on innovation from emerging economy firms. The authors introduce a new mechanism for emerging economy firms to learn and upgrade their capabilities. Second, the authors contribute to the literature on global value chains, by showing that vendor firms are able to learn from their clients and upgrade their capabilities. Third, by examining the innovation by vendor firms, the authors contribute to the R&D offshore outsourcing, which has largely focused on the client.Practical implicationsThe study findings have important implications for both clients and vendors. For client firms, the authors provide evidence that knowledge spillovers do happen, and R&D offshore outsourcing can turn vendors into potential competitors. This research helps firms from emerging economies by showing that becoming vendors for R&D offshore outsourcing is a viable option to learn from foreign firms and improve innovation performance. Going outside geographic boundaries may be a large hurdle for these resource-strapped, emerging economy firms. Providing offshore outsourcing services for narrow slices of R&D activities may be a starting point for these firms to upgrade their capabilities.Originality/valueThis paper is among the first to quantitatively study the innovation performance of vendor firms from emerging economies. The authors also contribute to the nascent literature on innovation in emerging economy firms by showing that providing R&D offshore outsourcing services to client firms from advanced countries can improve firms' innovation performance.

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The impact of R&D offshoring on the home knowledge production of OECD investing regions

Cited by 9 publications

References 103 publications

Academic Research Strengths and Multinational Firms' Foreign R&D Location Decisions: Evidence from R&D Investments in European Regions

Academic Research Strengths and Multinational Firms' Foreign R&D Location Decisions: Evidence from R&D Investments in European Regions

The production function of top R&D investors: Accounting for size and sector heterogeneity with quantile estimations

Does R&D offshore outsourcing improve innovation in vendor firms from emerging economies? A study of biopharmaceutical industry in India

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