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Globalization, technological advances and the demands of international competition have driven firms to develop activities in their value chains abroad. Although this phenomenon —known as offshoring— is not new, it has undeniably gained in importance over the last decade. And the scope, degree and motivations for international disaggregation of business activities have evolved significantly. Offshoring has become an important strategic option for firms, one that in recent years has included value-added activities such as research and development (R&D). We expand on the managerial implications of research that examines how different governance modes of international R&D sourcing —captive offshoring and offshore outsourcing— contribute to innovation and growth. Using contemporary examples for illustration, we make recommendations on R&D offshoring strategies that boost innovation and enable small and medium-sized enterprises (SMEs) to increase sales.

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