Why do firms locate r&d outsourcing agreeements offshore? the role of ownership, location, and externalization advantages

1. Martínez Noya, Andrea
2. García Canal, Esteban
3. Guillén, Mauro F.

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Abstract

We examine the decision to outsource R&D services to an offshore supplier instead of a domestic one. Building on the OLI paradigm, we argue that the decision to outsource offshore an R&D service is dependent on: �ownership� advantages (governance capabilities); �location-specific advantages� offshore; and �externalization advantages� for the activities outsourced. Our hypotheses were confirmed using original survey data from European and U.S. firms in high-tech industries. We found that firms with more governance capabilities are the ones showing a higher propensity to outsource offshore and that the specific location of the agreement is conditioned by the motivation to outsource.

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