Journal Article

Why Are Companies Offshoring Innovation? The Emerging Global Race for Talent

Lewin, Arie Y., Peeters, Carine, Massini, Silvia

2009

Overview

This paper empirically studies determinants of decision by companies to offshore innovation activities. It uses survey data from the international Offshoring Research Network project to estimate the impact of managerial intentionality, past experience, and environmental factors on the probability of offshoring innovation projects. The results show that the emerging shortage of highly skilled science and engineering talent in the US and, more generally, the need to access qualified personnel are important explanatory factors for offshoring innovation decisions. Moreover, contrary to drivers of many other functions, labor arbitrage is less important than other forms of cost savings. The paper concludes with a discussion of the changing dynamics underlying offshoring of innovation activities, suggesting that companies are entering a global race for talent.

• Publisher: Palgrave Macmillan,Palgrave Macmillan UK
• Subject: Ability / Arbitrage / Business / Business and Management / Business innovation / Business Strategy/Leadership / Business structures / Companies / Corporate Strategies / Cost control / Decision making / Engineering / Environmental aspects / Foreign subsidiaries / Global corporations / Globalization / Human capital / Information technology / Innovations / Intention / Intentionality / International Business / Labor costs / Management / Multinational corporations / Offshore / Offshoring / Organization / Organizational Designs / Outsourcing / Part Special Issue: Offshoring Administrative and Technical Work: Implications for Globalization / Product innovation / R&D / Race / Research & development / Studies / Talent management / Technological innovation