Building off the resource-based view and the knowledge-based view, our study aims to examine determinants of firms’ R&D outsourcing, using annually-conducted firm-level survey data of Japanese R&D companies from 1984–2012. This survey allows us to measure strategic R&D outsourcing, isolated from those more for cost-reducing, such as prototyping, testing and inspecting. The results corroborate the argument of complementarity in scale between internal R&D and R&D outsourcing. We also find that firms employing more doctorate holders and diversifying in knowledge spaces tend to make more use of R&D outsourcing. This study sheds light on firms’ absorptive capacity, associated both with higher-order R&D human capital and diversified knowledge spaces, as determinants of R&D outsourcing.
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