5. Conclusions
In this paper I have analyzed the factors that drive investments in R&D outsourcing. Firms are increasingly using this strategy to improve their innovation performance and efficiency (Bertrand and Mol, 2013; Cassiman and Veugelers, 2006; Larsen et al., 2013; Nieto and Rodrı´guez, 2011); however, there is a debate and confusion about why firms make this investment (Contractor et al., 2010; Grimpe and Kaiser, 2010; Weigelt, 2009). Here, I propose that different dimensions of the absorptive capacity of the firm explain why some firms are likely to invest more in R&D outsourcing. The logic is that firms that have created a degree of absorptive capacity are better at extracting value from outsourced R&D knowledge and thus have higher incentives to follow such a strategy. Building on and extending the knowledge-based view (Grant, 2013; Kogut and Zander, 1992, 1993) and the proposed theoretical separation between potential and realized absorptive capacity (Zahra and George, 2002), I have discussed four determinants that reflect these dimensions of absorptive capacity and explained how and why they influence investments in R&D outsourcing. Specifically, I have discussed how firms that have built their potential absorptive capacity by engaging with foreign customers and foreign suppliers have gained a better understanding of different and more complex external knowledge, recognizing its value, and developing the ability to search and integrate such knowledge within the firm. As a result, they invest more in R&D outsourcing. I have also argued that firms that have built a realized absorptive capacity with their more skilled employees and higher investments in internal R&D are more able to extract value from the outsourced R&D knowledge by using and transforming it with firm-internal knowledge to innovate. As a result, these firms invest more in R&D outsourcing. I have tested these arguments on a sample of manufacturing firms in Spain and find support for these ideas.