External Technology Supply and Client-Side Innovation

D. Audretsch, E. Lehmann, A. Link, A. Starnecker (Eds.), Technology Transfer in a Global Economy, Springer. ISBN 978-1-4614-6102-9., Forthcoming

30 Pages Posted: 21 Jan 2012 Last revised: 15 Jun 2014

Multiple version iconThere are 2 versions of this paper

Date Written: December 2012

Abstract

Flexibility in response to competitive pressure from globalized markets and increasingly individualized customer desires has become vital for firms. A common strategy to address this challenge is to employ a dynamic concept of organization and reach beyond the boundaries of the firm. Accordingly, technology transfer from providers of knowledge intensive business services attracts more and more attention. In this context we focus on external supply of information technology and client-side innovation. The aim of this paper is to contribute to resolving an empirical puzzle arising from the prior literature. Some authors find beneficial effects of IT outsourcing, others underline that firms often fail to achieve expected strategic goals. Our stylized theoretical model combines a knowledge production function framework and transaction cost economics. We hypothesize that the right balance between internal and external knowledge is critical for innovation. The empirical application is German firm-level data covering a wide range of industries from 2003 to 2006. Our results largely support the theoretical arguments and suggest a positive linear relationship between the level of outsourcing and process innovation. For product innovation we find a hump-shape.

Keywords: Knowledge Production Function, Transaction Cost Economics, Product Innovation, Process Innovation, KIBS, IT Outsourcing, ZEW ICT survey

JEL Classification: L24, D23, O31

Suggested Citation

Peukert, Christian, External Technology Supply and Client-Side Innovation (December 2012). D. Audretsch, E. Lehmann, A. Link, A. Starnecker (Eds.), Technology Transfer in a Global Economy, Springer. ISBN 978-1-4614-6102-9., Forthcoming, Available at SSRN: https://ssrn.com/abstract=1988833 or http://dx.doi.org/10.2139/ssrn.1988833

Christian Peukert (Contact Author)

University of Lausanne (HEC) ( email )

Unil Dorigny, Batiment Internef
Lausanne, 1015
Switzerland

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