Data for: 3320058
(Abstract) The purpose of this study is to analyze manufacturing firms’ choice of production as a strategic decision to increase their product innovation and internationalization using firm-survey data collected from Korea. The independent and moderating variables are derived from the transaction cost perspective, industry-based perspective and institution-based perspective. By bringing together the three (3) perspectives, this research attempts to investigate the extent to which outsourcing strategy decisions of the firms and the environmental context in which the firms operate determine the level of innovation and internationalization performance. With a sample of 164 manufacturing firms form Korea, the data was tested using logistic and linear (OLS) regression analysis to analyze the effects of outsourcing, competitive pressure and property right protection on product innovation and internationalization. The findings show that outsourcing helps firms to reduce the resources required to manufacture existing products and enable a firm capacity to utilize those saved resources on core competencies needed to create innovation. Furthermore, the study observes a negative moderating effect of competitive pressure on the relationship between outsourcing and innovation, indicating that in a highly competitive environment, firms should seriously consider internal production to prevent potential knowledge spillovers to other competitors. Finally, this study finds that the strength of the property right has a significant moderating effect towards firm’s export capacity. Through the results of this research, implications for managers and policy makers on how to increase product innovation and internationalization can be derived.