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The effects of production offshoring on R&D and innovation in the home country

: Dachs, Bernhard; Ebersberger, Bernd; Kinkel, Steffen; Som, Oliver


Economia e politica industriale = Journal of industrial and business economics 42 (2015), No.1, pp.9-31
ISSN: 0391-2078 (Print)
ISSN: 1972-4977 (Online)
Journal Article
Fraunhofer ISI ()
Offshoring; R&D; home country effects; investment; product innovation

We investigate the effects of production offshoring on the innovation activities of manufacturing firms in the home country. The analysis is based on a dataset of more than 3,000 manufacturing firms from seven European countries. We find that offshoring firms on average employ a higher share of R&D and design personnel, introduce new products more frequently to the market, 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.