Captive Offshoring of New Product Development in Brazil.

• This paper focuses on captive offshoring of new product development (NPD), i.e., relocating projects or project phases to foreign-based, wholly-owned, multinational corporation (MNc) subsidiaries (captive offshore units) to benefit from cost and efficiency advantages and/or from access to complementary technological resources and capabilities. • adopting a host country perspective, we theorize why different forms of local collaboration may complement or conflict with efficiency-seeking or arbitrage strategies and may thus influence why captive offshore units receive new product development orders from other MNC units located abroad. • Using a sample from Brazil and applying structural equation modeling with partial least squares (PLS), we find that local NPD outsourcing constitutes a complementary relationship, while local cooperation with clients creates a trade-off relationship with captive offshoring. that these relationships are moderated by the captive offshore unit's cost position within the MNc suggests that arbitrage effects transcend the headquarter-subsidiary relationship into the sphere of MNc subsidiaries' local collaborations. • Our findings imply that arbitrage in multinational contexts affects the interdependence between resources and transaction costs. [ABSTRACT FROM AUTHOR]