Basing our argument on the complexity theory,we use three consecutive
waves of the German part of the Community Innovation Survey to test our hypotheses.
We find an inverted u-shape of innovation offshoring on the effectiveness of organizational adaptability,implying an optimal threshold value of innovation offshoring. This value is 11% for the share of off shored R&D, 15% for downstream innovation activities such as local market adaptation,and 34% for design activities. We also analyze several contingency variables. In particular,we show that the costs of innovation offshoring in terms of reduced organizational adaptation are increased by a regional dispersion of the offshoring activities and strong embedded in onshore networks. We also show that smaller firms find it easier to deal with the management complexity induced by geographical dispersion of innovation activities.