Causal and exploratory associations between manufacturing outsourcing and innovation performance in the UK furniture industry

While the cost advantages associated with outsourcing are accepted, the impact that outsourcing may have on innovation performance is ambiguous. One perspective suggests that firms outsourcing low value-adding activities will achieve higher innovation performance (that is, better designed or more technologically advanced products or more substantive process improvements) than firms that perform these activities in-house. Another view holds that firms that outsource high value-adding activities may have lower innovation performance than those firms that perform these activities in-house. While these two positions are not contradictory, neither are they complimentary. Moreover, superior innovation performance can be achieved through the effective use of innovation, or dynamic, capabilities.