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Product cycle, contractibility, and global sourcing

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  • Chen, Xiaoping
  • Lu, Yi
  • Zhu, Lianming

Abstract

This paper examines the organizational structure of global sourcing over the product cycle. This paper combines a new product list data set with China's customs data. The analysis finds that multinationals first produce within their foreign subsidiaries. When the product matures, firms start to outsource their production to external foreign suppliers. International outsourcing appears earlier along the product cycle when contractibility is better.

Suggested Citation

  • Chen, Xiaoping & Lu, Yi & Zhu, Lianming, 2017. "Product cycle, contractibility, and global sourcing," Journal of Development Economics, Elsevier, vol. 127(C), pages 283-296.
    • Handle: RePEc:eee:deveco:v:127:y:2017:i:c:p:283-296
    DOI: 10.1016/j.jdeveco.2017.03.006
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    More about this item

    Keywords

    Global sourcing; Offshoring; Product cycle; Contractibility; Difference-in-difference-in-differences estimation;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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