In increasingly complex global competition, U.S. multinational firms have stepped up imports under items 806.30 and 807.00 of the Tariff Schedules of the United States as a part of offshore sourcing of components and finished products to serve the U.S. market. The literature offers two opposing views of the impact of U.S. firms' 806/807 imports on their innovative ability. At the current level of knowledge, mostly conceptual or anecdotal, the literature fails to present any empirical evidence as to whether such offshore sourcing by U.S. firms will indeed stifle or complement their innovative ability. This study attempts to fill this void by empirically examining this issue at the industry level.
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