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Factors Determining Offshore Location Choice for R&D Projects: A Comparative Study of Developed and Emerging Regions

Published on Jan 1, 2010in Journal of Management Studies 5.84
· DOI :10.1111/j.1467-6486.2010.00948.x
Mehmet Demirbag25
Estimated H-index: 25
(University of Sheffield),
Keith W. Glaister31
Estimated H-index: 31
(University of Sheffield)
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Abstract
This paper examines empirically the determinants of offshore location choice between country clusters. Based on a dataset of 1722 R&D projects by MNEs located in developed and emerging countries, we examine the impact of home and host country, industry, and firm level variables on choice of location. We draw on the extended OLI paradigm to develop our hypotheses. Using the EU15 as a base group, a multinomial logit model is estimated between the regions of USA&Canada, Eastern Europe&Russia, emerging countries of Asia, and India&China. At the regional level, findings show that the R&D wage difference and knowledge infrastructure difference between home and host countries, the science and engineering talent pool size, and political risk level of host countries are important determining factors. At the firm level, experience of overseas R&D projects and prior experience of research in the host country are found to be important location determinants. A distinguishing feature of the paper is that we examine regions in relation to a base region, and then further examine the impact of a marginal change in independent variables on the likelihood of the choice of a region for new offshore R&D projects.
  • References (54)
  • Citations (131)
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References54
Newest
Published on Feb 1, 2012in Journal of Technology Transfer 4.04
Anja Schmiele5
Estimated H-index: 5
(WHU - Otto Beisheim School of Management)
This paper aims to shed light on firm specific drivers that lead firms to internationalise their innovation activities. The paper draws a comprehensive picture of driving forces by including firm capabilities, characteristics of the firm’s competitive environment and the influence of innovation obstacles in the home country. In particular, the role of the potential driving forces is tested on the probability to carry out different innovative activities abroad (R&D, design/conception of new produ...
Published on Dec 1, 2010in Journal of Management Studies 5.84
Susan M. Mudambi17
Estimated H-index: 17
(TU: Temple University),
Stephen Tallman25
Estimated H-index: 25
(UR: University of Richmond)
Outsourcing knowledge and innovation activities offer cost savings and superior performance, but can also put a firm's unique resources and capabilities at risk. Characterizations of outsourcing as a make-or-buy decision do not fit well with decisions on knowledge process outsourcing (KPO). KPO is a make-or-ally decision, as firms seek a governance structure that will both protect and leverage their strategic knowledge assets, with the final decision often coming down to a choice between differe...
Published on Dec 1, 2010in Journal of Management Studies 5.84
Farok J. Contractor27
Estimated H-index: 27
(RU: Rutgers University),
Vikas Kumar29
Estimated H-index: 29
(USYD: University of Sydney)
+ 1 AuthorsTorben Pedersen45
Estimated H-index: 45
(CBS: Copenhagen Business School)
In the largest sense, global strategy amounts to (1) the optimal disaggregation or slicing of the firm's value chain into as many constituent pieces as organizationally and economically feasible, followed by (2) decisions as how each slice should be allocated geographically (‘offshoring’) and organizationally (‘outsourcing’). Offshoring and outsourcing are treated as strategies that need to be simultaneously analysed, where just ‘core’ segments of the value chain are retained in-house, while oth...
Published on Dec 1, 2010in Journal of Management Studies 5.84
Ram Mudambi42
Estimated H-index: 42
(TU: Temple University),
Markus Venzin9
Estimated H-index: 9
(Bocconi University)
One important effect of the increasing integration of the world economy is the rising importance of possibilities to offshore and outsource value-creating activities. In many industries, firms are able to disaggregate their value chains into smaller parts. This process allows for a less path-dependent approach to the firm's ideal location profile (through offshoring and relocation) and control strategies (through outsourcing). This article argues that optimal decisions regarding individual proce...
Published on Dec 1, 2010in Journal of Management Studies 5.84
Christoph Grimpe17
Estimated H-index: 17
,
Ulrich Kaiser18
Estimated H-index: 18
(UZH: University of Zurich)
The outsourcing of research and development (R&D) activities has frequently been characterized as an important instrument to acquire external technological knowledge that is subsequently integrated into a firm's own knowledge base. However, in this paper we argue that these ‘gains’ from R&D outsourcing need to be balanced against the ‘pains’ that stem from a dilution of firm-specific resources, the deterioration of integrative capabilities and the high demands on management attention. Based on a...
Published on Jul 19, 2010
Yifei Sun17
Estimated H-index: 17
(CSUN: California State University, Northridge),
Debin Du4
Estimated H-index: 4
(ECNU: East China Normal University),
Li Huang1
Estimated H-index: 1
(ECNU: East China Normal University)
This study examines foreign RD they are not only involved in short-term product development, but also in long-term original research. Shanghai's concentration of foreign R&D is clearly contingent upon the convergence of forces at the national, regional and local scales: China's burgeoning market at the national scale, the concentration of manufacturing and foreign investments in the Yangtze River Delta at the regional scale, and Shanghai's eminent position in China's economic landscape and its a...
Published on Sep 1, 2009in Management Information Systems Quarterly 4.37
Eugene D. Hahn15
Estimated H-index: 15
(SU: Salisbury University),
Jonathan P. Doh41
Estimated H-index: 41
(Villanova University),
Kraiwinee Bunyaratavej8
Estimated H-index: 8
(Wesley College)
Information systems offshoring has emerged as a significant force in the global political economy, an important source of firm-specific competitive advantage, and a focal point for debates over the benefits and costs of globalization. As worldwide competition exerts increasing pressure on the IS function of firms to become geographically unbundled, and IS services are dispersed among increasingly distant and unfamiliar locations, the issue of risk emerges as a significant factor in decisions abo...
Published on Aug 1, 2009in Journal of International Business Studies 7.72
Jonathan P. Doh41
Estimated H-index: 41
(Villanova University),
Kraiwinee Bunyaratavej8
Estimated H-index: 8
(Wesley College),
Eugene D. Hahn15
Estimated H-index: 15
(SU: Salisbury University)
In this paper we explore the question of why firms offshore particular services to specific geographic locations. We draw on research related to the unique characteristics of services in trade and commerce, and more recent analyses of the transnational unbundling and spatial dispersion of business processes. We move beyond a simple assessment of the cost sensitivity or relative sophistication of offshoring services and develop a typology emphasizing the degree to which offshoring services activi...
Published on Jul 1, 2009in Journal of World Business 5.79
Ben L. Kedia22
Estimated H-index: 22
(U of M: University of Memphis),
Debmalya Mukherjee12
Estimated H-index: 12
(College of Business Administration)
We present an analytical framework explaining offshoring in this paper. We address the question: why do firms offshore their business functions? Given the growing prevalence of offshoring as a dominant business practice in the world of global business, this question merits further research attention. We propose that firms embark on offshoring when they perceive three sets of interrelated advantages: disintegration advantages (D), location-specific resourcing advantages (L) and externalization ad...
Published on Nov 1, 2008in Economic Development Quarterly 0.78
Stephan Manning19
Estimated H-index: 19
(UMass: University of Massachusetts Amherst)
Western multinational corporations (MNCs) increasingly locate advanced functions, including product development and engineering, in emerging economies to gain access to lower-cost science and engineering (S&E) talent and specialized service providers. Over time, new S&E clusters have developed in emerging economies that are strongly oriented toward global MNC demands. This study investigates the role of foreign MNCs in the formation of these S&E clusters. It is proposed that pioneer MNCs promote...
Cited By131
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Published on Aug 1, 2018in Journal of Business Research 4.03
Liza Howe-Walsh5
Estimated H-index: 5
,
Sarah Louise Turnbull4
Estimated H-index: 4
,
Pawan Budhwar46
Estimated H-index: 46
(Aston University)
Abstract In a globally competitive market many organisations increasingly have challenges sourcing, developing and maintaining the skills they need to compete effectively. This study examines the less researched aspect of outsourcing from an emerging economy to a developed country. We examine why and how firms outsource advertising creativity in the United Arab Emirates (UAE). Based on the resource base view (RBV), using in-depth interviews with ‘elite’ senior advertising executives, we examine ...
Marina Papanastassiou16
Estimated H-index: 16
(Middlesex University),
Robert Pearce23
Estimated H-index: 23
(University of Reading),
Antonello Zanfei20
Estimated H-index: 20
(University of Urbino)
Internationalization of R&D and innovation by multinational enterprises (MNEs) has undergone a gradual and comprehensive change in perspective over the past 50 years. From sporadic works in the late 1950s and in the 1960s, it became a systematically analyzed topic in the 1970s, starting with pioneering reports and “foundation texts”. Our review unfolds the theoretical and empirical evolution of the literature from dyadic interpretations of centralization versus decentralization of R&D by MNEs to...
Published on Sep 8, 2018in International Journal of Production Research 3.20
Carsten Hansen1
Estimated H-index: 1
(Cranfield University),
Carlos Mena16
Estimated H-index: 16
(PSU: Portland State University),
Emel Aktas14
Estimated H-index: 14
(Cranfield University)
Published on Sep 1, 2018in Journal of World Business 5.79
Alfredo Valentino1
Estimated H-index: 1
(Libera Università Internazionale degli Studi Sociali Guido Carli),
Jan Schmitt1
Estimated H-index: 1
(WU: Vienna University of Economics and Business)
+ 1 AuthorsPhillip Christopher Nell13
Estimated H-index: 13
(WU: Vienna University of Economics and Business)
We investigate the effect of changing national institutions on relocations of intermediary HQs. Using a dataset of 154 cross-border relocations between the period from 2000 to 2015, we draw on the intermediary HQ's middle position within the MNC and investigate how a decrease in institutional quality in the HQ's host country and a change in institutional distance between different MNC units affect the relocation decision. Our findings advance the emergent literature on HQ relocations as well as ...
Zachary Cohle (Quinnipiac University)
While multinational firms from developed countries have used researchers from emerging areas to assist in the adaption of an existing product, few multinational firms have carried out innovative R&D, or R&D for the creation of a new product, in these areas. Using the threat of imitation and wage differences of researchers across regions, this study proposes a partial equilibrium model to explain the lack of innovative R&D in developing countries. I build a North-South model examining a single fi...
Published on Apr 1, 2019in Research Policy 5.42
Tiago Fonseca2
Estimated H-index: 2
(IST: Instituto Superior Técnico),
Pedro de Faria8
Estimated H-index: 8
(UG: University of Groningen),
Francisco Lima9
Estimated H-index: 9
(IST: Instituto Superior Técnico)
Management literature has identified high-skilled human capital as a crucial dimension of innovation processes at the firm level. In this study, we introduce an alternative view of human capital based on the tasks that firms’ workers perform. We propose a measure of cognitive analytical and interpersonal tasks: the degree of abstractism. We argue that the level of abstractism of a firm has an effect on a firm's propensity to innovate and on its product innovation performance. We hypothesize that...
Published on Mar 4, 2019in Journal of Risk Research 1.70
Ana Paula Beck da Silva Etges2
Estimated H-index: 2
(UFRGS: Universidade Federal do Rio Grande do Sul),
Marcelo Nogueira Cortimiglia11
Estimated H-index: 11
(UFRGS: Universidade Federal do Rio Grande do Sul)
AbstractInnovation and risk are inseparable. In fact, literature on innovation management often recommends that innovation-oriented firms must actively monitor, evaluate, analyze and treat future events in order to mitigate risks whenever possible. This approach is particularly important in emergent economies characterized by unstructured national innovation systems and constant economic and market instability. However, there has been no systematic effort to identify and categorize risks that po...
Published on Mar 1, 2019
Niccolò Pisani5
Estimated H-index: 5
(UvA: University of Amsterdam),
A. Kolk52
Estimated H-index: 52
(UvA: University of Amsterdam)
+ 1 AuthorsGanling Wu (UvA: University of Amsterdam)
Recent years have seen growing interest in a leading role for cities in addressing major environmental sustainability challenges including cleaner air and water. While geographers have long studied urban governance responses, international business (IB) scholars have embraced city-level analyses only in the past decade, primarily to examine multinationals’ location strategies. Thus far, IB has not studied cities’ environmental sustainability in relation to foreign direct investment (FDI) inflows...
Published on Jan 1, 2019
Kamal Fatehi5
Estimated H-index: 5
(KSU: Kennesaw State University),
Jeongho Choi (St. John Fisher College)
Because of globalization and increasingly intertwined global business environments, international business operations have become an expensive complex process. It has necessitated many firms to appropriately adjust and coordinate value-creation activities (e.g., manufacturing, R&D, marketing, and distribution) depending upon the host country environments (e.g., regulations and local market competition). Before firms take the plunge into a global business, they estimate the cost of adjustment and...