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Keywords:

  • outsourcing;
  • offshoring;
  • innovation;
  • cognitive distance;
  • absorptive capacity

This paper analyzes differences in the antecedents and performance consequences of domestic and offshore R&D outsourcing. Offshore outsourcing is characterized by larger cognitive distance. We find that absorptive capacity from internal R&D allows for more offshore outsourcing and that offshore outsourcing leads to more positive innovation outcomes, especially product innovation.