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A Tale of Two Literatures: Transaction Cost and Property Rights in Innovation Outsourcing

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This paper investigates the relative importance of property rights (PR) and transactions cost (TC) factors in driving the decision of firms to outsource innovation. The TC literature explains a small part of outsourcing decisions (cost saving motives) while the PR literature deals with revenue maximisation. Using data for over 8,000 firms from the UK Community Innovation Survey, we find that PR variables dominate over TC variables. Our results suggest that the decision to outsource innovation is mostly driven by the ability of firms to control information leakages, less so by cost motives.

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  • Nishaal Gooroochurn & Aoife Hanley, 2006. "A Tale of Two Literatures: Transaction Cost and Property Rights in Innovation Outsourcing," Occasional Papers 17, Industrial Economics Division.
    • Handle: RePEc:nub:occpap:17
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    5. Khraishi, Ahmad & Huq, Fahian & Paulraj, Antony, 2020. "Offshoring innovation: An empirical investigation of dyadic complementarity within SMEs," Journal of Business Research, Elsevier, vol. 118(C), pages 86-97.
    6. KANI Masayo & MOTOHASHI Kazuyuki, 2013. "Determinants of Demand for Technology in Relationships with Complementary Assets in Japanese Firms," Discussion papers 13033, Research Institute of Economy, Trade and Industry (RIETI).
    7. Shi, Xianwei & Liang, Xingkun & Luo, Yining, 2023. "Unpacking the intellectual structure of ecosystem research in innovation studies," Research Policy, Elsevier, vol. 52(6).
    8. Minarelli, Francesca & Raggi, Meri & Viaggi, Davide, 2015. "Innovation in European food SMEs: determinants and links between types," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 4(1), pages 1-21, April.
    9. Cohen, Maurie J., 2010. "Destination unknown: Pursuing sustainable mobility in the face of rival societal aspirations," Research Policy, Elsevier, vol. 39(4), pages 459-470, May.
    10. Pascucci, Stefano & Royer, Annie & Bijman, Jos, 2012. "To Make or to Buy: Is this the Question?," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 15(3), pages 1-20, September.
    11. Lichtenthaler, Ulrich, 2010. "Determinants of proactive and reactive technology licensing: A contingency perspective," Research Policy, Elsevier, vol. 39(1), pages 55-66, February.
    12. Martinez-Noya, Andrea & Garcia-Canal, Esteban & Guillen, Mauro F., 2012. "International R&D service outsourcing by technology-intensive firms: Whether and where?," Journal of International Management, Elsevier, vol. 18(1), pages 18-37.
    13. Daniel Wäldchen & Andreas H. Glas & Michael Essig, 2021. "Choice Behavior in Innovation Exchange Between Buyers and Sellers," Schmalenbach Journal of Business Research, Springer, vol. 73(2), pages 273-305, June.
    14. Materia, Valentina & Pascucci, Stefano & Dries, Liesbeth, 2015. "Are in-house and outsourcing innovation strategies interlinked? Evidence from the European agri-food sector," 2015 Conference, August 9-14, 2015, Milan, Italy 212449, International Association of Agricultural Economists.
    15. Emanuele Breda & Lucia Schiavon, 2017. "L?evoluzione del sistema moda in Veneto," ECONOMIA E SOCIET? REGIONALE, FrancoAngeli Editore, vol. 2017(3), pages 148-169.
    16. Ziming Bai & Tianyi Wang & Jiabin Xu & Cuixia Li, 2023. "Can Agricultural Productive Services Inhibit Carbon Emissions? Evidence from China," Land, MDPI, vol. 12(7), pages 1-20, June.
    17. Bos, Brenda & Broekhuizen, Thijs L.J. & de Faria, Pedro, 2015. "A dynamic view on secrecy management," Journal of Business Research, Elsevier, vol. 68(12), pages 2619-2627.
    18. Pascucci, Stefano & Royer, Annie & Bijman, Jos, 2011. "Should I Make or Should I Buy? Innovation Strategies and Governance Structures in the Italian Food Sector," International Journal on Food System Dynamics, International Center for Management, Communication, and Research, vol. 2(2), pages 1-14, December.
    19. Christian Peukert, 2012. "External Technology Supply and Client-Side Innovation," International Studies in Entrepreneurship, in: David B. Audretsch & Erik E. Lehmann & Albert N. Link & Alexander Starnecker (ed.), Technology Transfer in a Global Economy, edition 127, chapter 0, pages 161-184, Springer.
    20. Luigi Cantone & Pierpaolo Testa & Svend Hollensen & Giuseppe Fabio Cantone, 2019. "Outsourcing New Product Development Fostered By Disruptive Technological Innovation: A Decision-Making Model," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 23(01), pages 1-45, January.
    21. Blandine Laperche, 2012. "How to Coordinate the Networked Enterprise in a Context of Open Innovation? A New Function for Intellectual Property Rights," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 3(4), pages 354-371, December.
    22. Valentina C. Materia & Stefano Pascucci & Liesbeth Dries, 2017. "Are In-House and Outsourcing Innovation Strategies Correlated? Evidence from the European Agri-Food Sector," Journal of Agricultural Economics, Wiley Blackwell, vol. 68(1), pages 249-268, February.
    23. Laspia, Alessandro & Sansone, Giuliano & Landoni, Paolo & Racanelli, Domenico & Bartezzaghi, Emilio, 2021. "The organization of innovation services in science and technology parks: Evidence from a multi-case study analysis in Europe," Technological Forecasting and Social Change, Elsevier, vol. 173(C).
    24. Bertrand, Olivier, 2009. "Effects of foreign acquisitions on R&D activity: Evidence from firm-level data for France," Research Policy, Elsevier, vol. 38(6), pages 1021-1031, July.

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    Keywords

    transaction cost; property rights; innovation;
    All these keywords.

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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