Determinants of internal and external R&D offshoring: evidence from Spanish firms

Abstract

This paper analyses the determinants of R&D offshoring of Spanish firms using information from the Panel of Technological Innovation. We find that being an exporter, international technological cooperation, continuous R&D engagement, applying for patents, being a foreign subsidiary, and firm size are factors that positively affect the decision to offshore R&D. In addition, we find that a lack of financing is an obstacle relatively more important for independent firms than for firms that belong to business groups. For these latter, we also obtain that the factors that influence the decision to offshore R&D differ depending on whether the firm purchases the R&D services within the group or through the market: a higher degree of importance assigned to internal sources of information for innovation as compared to market sources increases (decreases) the probability of R&D offshoring only through the group (market).

Keywords:

• R&D offshoring firms’ strategies
• obstacles to innovation
• independent firms
• subsidiaries

JEL Classification:

• L24
• O32

Acknowledgements

The authors are particularly grateful to two anonymous referees for useful comments. We also thank the seminar audiences at the European Network of the Economics of the Firm (ENEF) workshop (Madrid) and the R&D Management Conference 2015 (Pisa). All errors are ours.

Notes

¹ Some recent examples are the analyses made by Jabbour and Zuniga (2009, 2016), García-Vega and Huergo (2011), Martinez-Noya, Garcia-Canal, and Guillen (2012) and Holl and Rama (2014).

² In this sense, the reasons for R&D offshoring may vary considerably depending on the relative levels of (technological and economic) development of the investing and host countries (Hall 2011).

³ The PITEC is publicly available to researchers at: http://icono.fecyt.es/PITEC/Paginas/por_que.aspx. The files accessible on this site correspond to the files maintained by INE, except for the ‘anonymization’ of a series of variables so that corresponding firms cannot be identified. López (2011) shows that the expected biases due to this anonymisation are small through the comparison of regressions that use original and harmonised data alternatively.

⁴ As Markusen (2005) suggests, although liberalisation allows the trade volume of already-existing products to expand (intensive margin), the increase in service offshoring is also related to the expansion of trade in the extensive margin, since new tasks can be commercialised because of innovation in communication and technology.

⁵ The main statistics that describe these variables can be found in Table 2.

⁶ In PITEC, enterprises belonging to groups specify whether they are parent companies, subsidiaries, joint ventures or associate companies. Note that for firms in groups, data in our database are not consolidated. In this sense, the Spanish Innovation Survey follows the Community Innovation Survey that includes the following statement in the harmonised survey questionnaire: ‘If your enterprise is part of an enterprise group: Please answer all further questions about your enterprise only for the enterprise for which you are responsible in [your country]’.

⁷ In each Table of this paper, we denote by (t − 1) the variables that are lagged.

⁸ For simplicity, in Table 5 we only show marginal effects for the expected value of R&D offshoring intensity conditional on offshoring R&D. Marginal effects for the probability of offshoring are available from the authors upon request.