Offshoring innovation to emerging countries: the effects of ip protection and cultural differences on firms' decision to augment versus exploit home-base-knowledge

Developed-country multinationals (DMNEs) have increasingly engaged in the practice of ofshoring innovation to emerging countries. In this article, we leverage and extend the institution-based view to further our understanding of this phenomenon. Specifcally, we examine the diferential efects of formal and informal institutions on DMNEs’ strategic decision to ofshore innovation activities aimed at augmenting (versus exploiting) home-base-knowledge to emerging countries. Concerning formal institutions, we argue that the stronger the emerging host country’s IP protection, the higher the likelihood that a DMNE ofshores innovation activities aimed at augmenting home-base-knowledge. Regarding informal institutions, we argue that the greater the cultural diferences between the developed home country and the emerging host country, the higher the likelihood that a DMNE ofshores innovation activities aimed at augmenting home-base-knowledge. Additionally, we propose a key contingency that attenuates the relationship involving IP protection while strengthening the one involving cultural diferences: the DMNE’s experience with ofshoring innovation. Analysis of 128 ofshoring innovation implementations by 78 DMNEs in ten emerging countries provides support for all our hypotheses except for the one focused on the moderation efect of experience on the relationship involving cultural diferences

Offshoring of services: a review of the literature and organizing framework

Offshoring of services (OS), commonly defined as the international relocation of service activities that companies previously performed in their home country, has emerged as a relevant phenomenon in international business (IB). Over the past two decades, OS has grown rapidly in the global economy and it has increasingly attracted IB scholars’ attention. In this study, we systematically review the literature to map and assess the body of IB research focused on the OS phenomenon. To achieve our goal, we identify and analyze a total of 79 studies that appeared from 1990 to 2014 in a select group of 14 journals that are widely considered leading publishers of IB research. This review seeks to make a threefold contribution to the IB discipline. First, it provides an in-depth analysis of the OS literature through a synthesis of the theoretical perspectives adopted and an assessment of the empirical findings obtained. Second, it offers an organizing framework that contributes to a more nuanced understanding of the OS phenomenon. Third, it identifies emerging topics on the OS frontier and suggests potential avenues for future research

Offshoring innovation to emerging countries: the effects of ip protection and cultural differences on firms' decision to augment versus exploit home-base-knowledge

Developed-country multinationals (DMNEs) have increasingly engaged in the practice of ofshoring innovation to emerging countries. In this article, we leverage and extend the institution-based view to further our understanding of this phenomenon. Specifcally, we examine the diferential efects of formal and informal institutions on DMNEs’ strategic decision to ofshore innovation activities aimed at augmenting (versus exploiting) home-base-knowledge to emerging countries. Concerning formal institutions, we argue that the stronger the emerging host country’s IP protection, the higher the likelihood that a DMNE ofshores innovation activities aimed at augmenting home-base-knowledge. Regarding informal institutions, we argue that the greater the cultural diferences between the developed home country and the emerging host country, the higher the likelihood that a DMNE ofshores innovation activities aimed at augmenting home-base-knowledge. Additionally, we propose a key contingency that attenuates the relationship involving IP protection while strengthening the one involving cultural diferences: the DMNE’s experience with ofshoring innovation. Analysis of 128 ofshoring innovation implementations by 78 DMNEs in ten emerging countries provides support for all our hypotheses except for the one focused on the moderation efect of experience on the relationship involving cultural diferences