The Record on R&D Outsourcing
27 Pages Posted: 3 Apr 2016 Last revised: 23 Mar 2019
Date Written: March 19, 2019
A major trend over the past few decades is open innovation. Interestingly this trend coincides with a substantial decline in R&D productivity. This paper examines whether these trends are related. Looking at one form of open innovation (R&D outsourcing), I find it has increased 2050%. I further find it is unproductive -- it generates no increase in revenues. This result is robust to controls for the type of firms who outsource, and the type of projects they outsource. Moreover neither the productivity of outsourced R&D nor internal R&D has changed over time. This is encouraging. It suggests firms can restore their R&D productivity and by gradually insourcing R&D.
Keywords: R&D, outsourcing, productivity, growth, open innovation
JEL Classification: O32, L25
Suggested Citation: Suggested Citation