Back Issues 11-20

THE GOVERNANCE DECISIONS FOR A R&D OFFSHORING FIRM

Wen-Bin Chuang

Department of International Business Studies, National Chi-Nan University, 

Taiwan, R.O.C.

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Tsui-Lin Chiang*

MBA Program in International Management, Bachelor’s Program in Business 

Management, Fu Jen Catholic University, Taiwan, R.O.C.

*Corresponding Author: This email address is being protected from spambots. You need JavaScript enabled to view it.

Kai-Ping Huang

Department of Business Administration, MBA Program in International Management,

Fu Jen Catholic University, Taiwan, R.O.C. 

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Abstract

The purpose of this study is to verify the potential difference in different governance decisions (captive and outsourcing mode) for a R&D offshoring firm. Due to the specific feature of technological assets, we particularly pay attention to the relationships between governance decisions and the motivations to offshore R&D. This analysis takes advantage of the longitudinal dataset on Taiwan-based manufacturing firms for the period 2009-2012 and employs a propensity score of multinomial choice method to correct the bias from the potential outcomes in observational data. We show that outsourcing mode bring a larger firm productivity for exploitation-orientation firms, while captive mode is observed for exploration-orientation cases. With the transform of network integration from OEM arrangements to ODM arrangements in global value chain activities, a R&D offshoring firm will change its governance mode for the local environment to raise productivity. The results offer useful implication for academia and policy makers.

Keywords: Offshore R&D, Governance Decision, Network Transform, Global Value Chain and Taiwan-Based Firms.