Does IT outsourcing really influence firms' process innovativeness? We investigate this question with a distinguished view on manufacturing and service sectors. Previous studies suggest firms sourcing out IT services to external service providers are generally more process innovative. Based on a firm‐level data set comprising 1452 firms from the German manufacturing and services sectors, the econometric analysis confirms a positive and significant relationship between IT outsourcing and process innovation activity on an aggregate level. As proposed by our framework of differences between manufacturing and service firms, a more detailed analysis reveals that this positive relationship only holds for services firms. Copyright © 2016 John Wiley & Sons, Ltd.

Bertschek, Irene, Daniel Erdsiek and Manuel Trenz (2017), IT Outsourcing - A Source of Innovation? - Microeconometric Evidence for Germany, Managerial and Decision Economics Vol. 38, Issue 7, 941-954 . Download