Papers in Innovation Studies, CIRCLE, Center for Innovation, Research and Competences in the Learning Economy, Lund University
Technological Capabilities, Technological Dynamism and Innovation Offshoring
(), Elisabeth Baier
() and Christian Rammer
Abstract: In this paper we analyze the conditions under which firms
decide to offshore innovation. We consider the role of internal
technological capabilities and technological dynamism in the firm
environment, distinguishing speed and uncertainty of technological change.
Using unique data from the German Innovation Survey we find that while high
speed of technological change tends to drive innovation offshoring, high
uncertainty about future technology developments results in more innovation
offshoring only for firms with low internal technological capabilities.
Firms with high technological capabilities instead are less likely to
offshore innovation when uncertainty is high. We argue that these
differences in offshoring behaviour reflect differing strategic objectives.
We show that for firms with low technological capabilities asset
augmentation is more important while for firms with high technological
capabilities asset exploitation is more important. When faced by high
technological uncertainty firms with low technological capabilities
offshore innovation strategically in order to reduce uncertainty by
augmenting their asset base. For firms with high technological capabilities
asset augmentation is less important. When faced by high technological
uncertainty, they prefer to innovate onshore in order to keep stronger
control of their key assets.
Keywords: offshoring; R&D; uncertainty; competition; technological change; speed; (follow links to similar papers)
JEL-Codes: F21; F23; L22; O32; (follow links to similar papers)
31 pages, July 25, 2016
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