Brand matters. In a global economy, with
fiercely competitive firms rapidly commoditizing products, strong
brands help companies to stand out from the crowd and differentiate
themselves on a basis other than cost. No longer the preserve
of consumer packaged goods companies, brands are now taken seriously
in almost every industry and at the highest echelons of management.
Even firms that once competed almost entirely on technical excellence
or cheap prices are now trying to build and leverage the strength
of their brand.
Economists, including Paul Samuelson and
Jagdish Bhagwati, vigorously debate whether offshore outsourcing
in high-tech industries helps or harms the U.S. economy. The
main issue is whether insourcing countries, such as China or
India, will catch up with and eventually outcompete the U.S.
Moreover, the dearth of off shore outsourcing data has hindered
the study of the impact of offshore outsourcing. To explore
the impact of offshore outsourcing, I examine how the heterogeneity
of offshore outsourcing demand affects insourcing firms' innovation
choices and how these innovation choices connect with the technology-driven
productivity growth of the insourcing industry. This paper contributes
to the understanding of offshore outsourcing in three vital
ways.