Learning from R&D outsourcing vs. learning by R&D outsourcing. (April 2018)

• Record Type: Journal Article
• Authors: Un, C. Annique; Rodríguez, Alicia
• Is Part Of: Technovation. Volume 72/73(2018)
• Page Start: 24
• Page End: 33
• Publication Date: 2018-04
• Subjects: R&D outsourcing -- Internal R&D -- Learning from R&D outsourcing -- Learning by R&D outsourcing; Technological innovations -- Periodicals; Industrial management -- Periodicals; Innovations -- Périodiques; Gestion d'entreprise -- Périodiques; Electronic journals; 658.57
• DOI: 10.1016/j.technovation.2017.12.003
• Languages: English
• ISSNs: 0166-4972

Abstract

Abstract: We analyze how research and development (R&D) outsourcing influences product innovation. We propose a separation between learning from R&D outsourcing, whereby the firm improves its ability to innovate by using outsourced R&D directly in new products, from learning by R&D outsourcing, whereby the firm indirectly uses outsourced R&D by integrating it with internal R&D to create new products. Building on the knowledge-based view, we argue that learning from R&D outsourcing is likely to have an inverse U-shaped relationship with product innovation, because the initial benefits of using outsourced component R&D knowledge to innovate products is eventually outweighed by the hollowing out of the firm's ability to innovate. In contrast, we propose that learning by R&D outsourcing is likely to have a U-shaped relationship with product innovation, because the initial challenges of integrating internal and external R&D are eventually overcome, resulting in more innovations. Finally, we distinguish between domestic and foreign R&D outsourcing and propose a liability of foreignness in R&D outsourcing as it has a lower impact on new products than domestic R&D outsourcing. The empirical analysis shows that outsourced R&D has an inverted U-shaped relationship with the number of new products, while the interaction between outsourced R&D and internal R&D has a U-shaped relationship with the number of new products. It also shows that domestic outsourced R&D has a higher positive impact on the number of new products than foreign outsourced R&D. Highlights: Introduce two new concepts on R&D outsourcing: learning from R&D outsourcing (direct effect) and learning by R&D outsourcing (indirect effect). Propose an inverse U-shaped relationship between learning from R&D outsourcing and number of new products. Propose a U-shaped relationship between learning by R&D outsourcing and number of new products. Separate R&D outsourcing by location: domestic and foreign. Introduce the liability of foreignness in R&D outsourcing concept, explaining why foreign R&D outsourcing has a lower positive effect than domestic R&D outsourcing on number of new products.