Corporate decision-making in R&D outsourcing and the impact on internal R&D employment intensity

This article aims to assess whether firms' strategies of R&D outsourcing determine changes in their internal R&D employment intensity. Four strategic decisions are investigated: to start, increase, decrease or stop outsourcing. It is found that internal R&D employment intensity decreases when firms decide to start, to increase, or to stop R&D outsourcing. However, this finding hides important differences according to the type and the location of the contractor. In general, firms prefer a mix of different types of contractors at different locations. Started outsourcing of R&D to research centers within the nation and increased R&D outsourcing to research centers within the region appear to decrease the internal R&D employment intensity. Decreasing outsourcing to national universities in another region also has a negative impact on internal R&D employment intensity. A corporate decision to stop R&D outsourcing to other firms within the nation but outside the region has a positive impact on the internal R&D employment intensity. The latter is the only effect that is not only statistically significant but is also substantial in magnitude. Copyright 2010 The Author 2010. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.