Page 53 - 臺大管理論叢第33卷第1期

NTU Management Review Vol. 33 No. 1 Apr. 2023

as global innovation (e.g., Mudambi, 2008; Nandkumar and Srikanth, 2016), offshoring
innovation (e.g., Contractor et al., 2010; Kedia and Mukherjee, 2009; Lewin, Massini, and
Peeters, 2009), R&D internationalization (e.g., Belderbos, Lokshin, and Sadowski, 2015;
Chang, Lee, Chieng, and Chin, 2013; Chen and Hsiao, 2013; Chen, Huang, and Lin, 2012;

Hsu, Lien, and Chen, 2015; Liu and Chen, 2007), and offshore outsourcing innovation (e.g.,
Rodríguez and Nieto, 2016; Santangelo, Meyer, and Jindra, 2016).
Offshore outsourcing innovation is an increasingly important industrial activity and

academic topic. It emphasizes that firms cannot and should not conduct all innovation
activities such as R&D, product design, analytical service, software development, and
engineering activities internally, but can and should capitalize on external knowledge
which can be licensed or bought in offshore countries (Contractor et al., 2010; Gassmann,
2006; Kedia and Mukherjee, 2009). Offshore outsourcing innovation is also one of the

most desirable strategies for firms to operate in foreign countries. For one thing, offshore
innovation outsourcing is realistic when firms scout for specific knowledge or capabilities
that are owned by offshore contract providers in foreign countries (Alcácer, Cantwell,

and Piscitello, 2016; Chung and Alcácer, 2002; Massini et al., 2010). For another thing,
offshore innovation outsourcing is feasible and efficient when firms are unable to make the
high upfront investment or when internalizing innovation activities in foreign countries
involves huge sunk costs (Gooris and Peeters, 2016; Sartor and Beamish, 2014). In these
cases, offshore innovation outsourcing becomes a desirable strategy for firms to conduct

innovation activities in foreign countries.
As the research summary of offshore outsourcing innovation shown in Table 1,
four major streams found in recent literature are: cost advantages, innovation outcomes,

institutional contexts, and knowledge management. At first, the early research stream
of offshore innovation outsourcing mainly focuses on its cost advantages. For example,
Kapler and Puhala (2011) find that offshore outsourcing clinical trials in India offered an
additional opportunity for the pharmaceutical companies to reduce costs by 50 percent. In
addition, Teirlinck and Spithoven (2013) indicate that offshore innovation outsourcing is

also able to examine new areas with relatively low capital involvement in case of failure
in foreign countries. By contrast, Cozza, Franco, Perani, and Zanfei (2021) argue that
firms face higher costs when internalizing innovation and developing formal and informal

relations with knowledge suppliers involved in the host location’s system of innovation.

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