The Effects of Production Offshoring on R&D and Innovation in the Home Country

36 Pages Posted: 25 Oct 2013

See all articles by Bernhard Dachs

Bernhard Dachs

AIT Austrian Institute of Technology

Bernd Ebersberger

Management Center Innsbruck (MCI)

Steffen Kinkel

Karlsruhe University of Applied Sciences

Oliver Som

Fraunhofer Institute for Systems and Innovation Research (ISI)

Date Written: October 24, 2013

Abstract

This paper tests the assumption that offshoring of production activities leads to less innovation in the home country. The analysis is based on a dataset of more than 3000 manufacturing firms from seven European countries. We find that offshoring firms employ more people in R&D and design, introduce more frequently new products, and invest more frequently in advanced process technologies compared to non-offshoring firms. Concerns that offshoring may hurt innovation because of the lost links between production and product development are not supported by the evidence.

Keywords: offshoring, R&D, home country effects, investment, product innovation, process innovation

JEL Classification: F230, F610, O310, O330

Suggested Citation

Dachs, Bernhard and Ebersberger, Bernd and Kinkel, Steffen and Som, Oliver, The Effects of Production Offshoring on R&D and Innovation in the Home Country (October 24, 2013). Available at SSRN: https://ssrn.com/abstract=2344627 or http://dx.doi.org/10.2139/ssrn.2344627

Bernhard Dachs (Contact Author)

AIT Austrian Institute of Technology ( email )

Donau-City-Straße 1
Vienna, 1220
Austria

Bernd Ebersberger

Management Center Innsbruck (MCI) ( email )

Universitaetsstr. 15
Innsbruck, 6020
Austria

Steffen Kinkel

Karlsruhe University of Applied Sciences ( email )

Karlsruhe
Germany

Oliver Som

Fraunhofer Institute for Systems and Innovation Research (ISI) ( email )

Breslauer Str. 48
Karlsruhe, 76139
Germany

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