The Innovative Performance of R&D Outsourcing

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Levan Bzhalava


Firms increasingly outsource their R&D activities to external actors, but little is known about how this R&D strategy relates to the value of their research output (in terms of invention quantity as well as quality). To study this issue, I analyse a pooled cross-sectional dataset of German manufacturing firms. The results obtained from the data analysis suggest that R&D outsourcing as well as the interaction between this strategy and internal R&D are significantly and positively associated with invention quantity but not with invention quality. Furthermore, the estimation results show that manufacturing rather than service companies are more likely to explore both internal and external R&D strategies to generate inventions. Besides that, the data analysis indicates that R&D outsourcing is more important innovative input for firms operating in science-based industries than in scale-intensive and specialized-supplier sectors.

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