Learning from R&D outsourcing vs. learning by R&D outsourcing |
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Institution: | 1. Area Science Park, Istituto Ricerche, Padriciano 99, 34149 Trieste, Italy;2. Department of Political Science, University of Pisa, Via Serafini 3, 56126 Pisa, Italy;3. ISTAT, Via Cesare Balbo 16, 00184 Rome, Italy |
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Abstract: | We analyze how research and development (R&D) outsourcing influences product innovation. We propose a separation between learning from R&D outsourcing, whereby the firm improves its ability to innovate by using outsourced R&D directly in new products, from learning by R&D outsourcing, whereby the firm indirectly uses outsourced R&D by integrating it with internal R&D to create new products. Building on the knowledge-based view, we argue that learning from R&D outsourcing is likely to have an inverse U-shaped relationship with product innovation, because the initial benefits of using outsourced component R&D knowledge to innovate products is eventually outweighed by the hollowing out of the firm's ability to innovate. In contrast, we propose that learning by R&D outsourcing is likely to have a U-shaped relationship with product innovation, because the initial challenges of integrating internal and external R&D are eventually overcome, resulting in more innovations. Finally, we distinguish between domestic and foreign R&D outsourcing and propose a liability of foreignness in R&D outsourcing as it has a lower impact on new products than domestic R&D outsourcing. The empirical analysis shows that outsourced R&D has an inverted U-shaped relationship with the number of new products, while the interaction between outsourced R&D and internal R&D has a U-shaped relationship with the number of new products. It also shows that domestic outsourced R&D has a higher positive impact on the number of new products than foreign outsourced R&D. |
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Keywords: | R&D outsourcing Internal R&D Learning from R&D outsourcing Learning by R&D outsourcing |
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