The impact of R&D sourcing strategies on basic and developmental R&D in emerging economies

Abstract

Purpose The purpose of this paper is to investigate the impact of R&D sourcing strategies and their governance modes on basic and developmental R&D. Following the concept of cognitive distance, this research proposes that there are trade-offs between basic and developmental R&D when emerging economy firms engage in different R&D sourcing strategies. R&D sourcing can enable emerging economy firms to access different level of heterogeneity of knowledge inputs depending on the cognitive distance between the firm and its suppliers. Distance in cognition increases when firms obtain knowledge from abroad and independent suppliers in comparison to the acquisition of knowledge from home boundaries and affiliates. Design/methodology/approach Tobit maximum likelihood estimation approach is used. Findings Using data from Turkish firms, this study finds out that offshore R&D with an outsourcing governance mode affects basic R&D. In contrast, domestic R&D with an insourcing mode influences developmental R&D. Originality/value This research extends recent efforts to better understand the determinants of different R&D types by examining offshore and domestic R&D together and by taking into account different governance modes of each R&D sourcing strategy. This study becomes important because it investigates this issue from the perspective of emerging economy firms.