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Offshoring Brains? Evidence on the Complementarity between Manufacturing and R&D in Danish Firms *
Author(s) -
Andersen Svend Greniman
Publication year - 2020
Publication title -
the scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/sjoe.12388
Subject(s) - offshoring , complementarity (molecular biology) , danish , business , economics , product (mathematics) , industrial organization , outsourcing , marketing , linguistics , philosophy , genetics , biology , geometry , mathematics
By employing a firm‐level linked employer–employee dataset for Danish manufacturing firms, this paper investigates whether offshoring is complementary to, or a substitute for, research and development (R&D) activities. Offshoring is instrumented with world export supply to circumvent the inherent endogenous nature of the firm's decision to offshore. Results suggest that firms with increased offshoring do in fact tend to engage in further R&D activities at home. Moreover, they also tend to reallocate R&D resources toward product R&D, possibly at the expense of process R&D.