Innovation Offshoring Initiative

Project

Offshoring of innovation is a strategy that is regarded as the domain of multinational enterprises (MNEs). Well-known examples are Intel’s fully integrated chip design in India or IBM’s transformation from an internal to an external corporate innovation system. What is hardly touched on by research, however, is that innovation offshoring has also become a reality for small and medium-sized enterprises (SMEs). Recently, advances in information technology (IT) and the ease of doing business globally, combined with home-country innovation hurdles, have induced SMEs to source their innovation from abroad to an increasingly greater extent. These foreign sources of innovation benefit SMEs by expanding their innovative capabilities and reducing costs. Associated risks, however, are a loss of intellectual property (IP) or core business competencies. The very basic SME-related questions, such as the extent, mode and evolution of innovation offshoring, the motivation for it and the obstacles to it, are not yet understood. This is extremely unfortunate, as practice needs to be informed about the potential benefits and risks. Up-to-date qualitative and quantitative data are urgently needed to address these blind spots in academic research.

This project aims to shed light on these blind spots by answering some of the most fundamental questions in innovation offshoring research on SMEs in three steps:

1. Drawing a thematic map of current innovation offshoring research and identifying the research gaps that form the start of the empirical study
2. Developing new SME-specific hypotheses to account for the particularities of those SMEs that internationalize their innovative activities. This is done through qualitative interviews and a large-scale expert panel in order to achieve fresh insights
3. Validating these original hypotheses using a large-scale, two-country, quantitative survey targeting Austrian and British SMEs

To account for the wide scope of the exploratory research questions, this study is designed to follow a sequential mixed-method approach with methods tailored to each phase. The contributions of the project are as follows:

1. For science, it provides a first comprehensive picture of existing research on innovation offshoring in general and innovation offshoring by SMEs specifically. This not only highlights the various streams of research, but also points out future directions to help develop the field of international entrepreneurship and international business. Furthermore, researchers are able to base future, more specialized, studies on the groundwork developed so thoroughly in this research. This study adds significantly to the body of knowledge by accessing world-class research resources (Offshore Research Network and Manchester Institute of Innovation Research)
2. For practice, it provides first-hand insights into the internationalization of SMEs’ innovation, providing an urgently needed orientation. In particular, the findings of the in-depth empirical analysis give SMEs invaluable direction for optimizing their current, and planning their future, sources of innovation
3. For policy makers, it provides important evidence based on thoroughly collected data. This helps to inform innovation policy tailored to the needs of more than 99% of all firms in Austria and the UK, affecting these countries’ innovativeness and global competitiveness

Publications

• Gusenbauer, M., (2015), Understanding Innovation Offshoring – A Review of the Current Body of Knowledge (Doctoral thesis).
• Gusenbauer, M., Massini, S. and Fink, M. (2015), “Innovation Offshoring by Small and Medium-Sized Enterprises – Establishing the Research Gap”, in Oshri, I., Kotlarsky, J. and Willcocks, L.P. (Eds.), Achieving success and innovation in global sourcing: Perspectives and practices, Lecture Notes in Business Information Processing, Vol. 236, Springer Berlin Heidelberg, New York NY, pp. 156–170.
• Gusenbauer, Michael (2011): “Offshoring of Research and Development in the US Semiconductor Industry – A Survey of Small and Medium-Sized Enterprises”. Published in: NEURUS paper series. EconPapers (Diploma thesis).