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Outsourcing business services and the role of central administrative offices

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  • Ono, Yukako

Abstract

In this paper, I study whether there is any evidence that the market scale surrounding a central administrative office (CAO), which includes corporate headquarters, influences a firm's cost-effectiveness in procuring business services. By linking plant-level data from the 1992 Annual Survey of Manufactures with CAO information from the Survey of Auxiliary Establishments, I examine manufacturing plants' practice of outsourcing services in relation to the size of the local service market surrounding the plant and that surrounding the plant's CAO. I found statistically significant evidence that the greater the size of local market surrounding a CAO, the higher the plant's probability of relying on the CAO for outsourcing advertising, bookkeeping and accounting, and legal services. These results are found even after controlling for the size of the local market surrounding a plant and plant characteristics.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 53 (2003)
Issue (Month): 3 (May)
Pages: 377-395

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Handle: RePEc:eee:juecon:v:53:y:2003:i:3:p:377-395

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Web page: http://www.elsevier.com/locate/inca/622905

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  1. Antonio Ciccone & Robert E. Hall, 1995. "Productivity and the density of economic activity," Economics Working Papers 120, Department of Economics and Business, Universitat Pompeu Fabra.
  2. Glaeser, Edward L & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1992. "Growth in Cities," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1126-52, December.
    • Glaeser, Edward Ludwig & Kallal, Hedi D. & Scheinkman, Jose A. & Shleifer, Andrei, 1992. "Growth in Cities," Scholarly Articles 3451309, Harvard University Department of Economics.
    • Edward L. Glaeser & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1991. "Growth in Cities," NBER Working Papers 3787, National Bureau of Economic Research, Inc.
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