Why are different services outsourced to different countries?
AbstractThe “tradability revolution” in services has led to a dramatic expansion of offshore outsourcing of services, allowing firms to take advantage of lower production costs in foreign countries. However, production costs alone cannot explain the location determinants of offshore outsourcing of services. In this paper, we argue that minimizing transaction costs is also an important determinant of the location of offshore outsourcing of services. We empirically analyze characteristics of services and characteristics of foreign countries that may impact on transaction costs in an outsourcing relationship and hence determine where services will be outsourced offshore. We derive measures of service characteristics – routineness, complexity and interactiveness – based on the tasks required to provide them. Further, we posit that there are interaction effects between service and country characteristics. Using Bureau of Economic Analysis data on US service outsourcing across 11 types of services to 31 countries between 1992 and 2005, we find that: (1) services that are more routine, less complex or less interactive are outsourced more to foreign countries; (2) services are outsourced more to countries with higher institutional quality and greater cultural proximity; (3) non-routine, complex and interactive services are outsourced relatively more to countries with a better institutional quality.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Palgrave Macmillan in its journal Journal of International Business Studies.
Volume (Year): 42 (2011)
Issue (Month): 4 (May)
Contact details of provider:
Web page: http://www.palgrave-journals.com/
Postal: Palgrave Macmillan Journals, Subscription Department, Houndmills, Basingstoke, Hampshire RG21 6XS, UK
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Schmeisser, Bjoern, 2013. "A Systematic Review of Literature on Offshoring of Value Chain Activities," Journal of International Management, Elsevier, Elsevier, vol. 19(4), pages 390-406.
- Martin Falk, 2012. "Determinants of Greenfield Investment in Knowledge Intensive Business Services," FIW Research Reports series, FIW IV-002, FIW.
- Julien Gooris & Carine Peeters, 2012. "Home-Host Country Distance and Governance Choices in Service Offshoring," Working Papers ECARES, ULB -- Universite Libre de Bruxelles ECARES 2012-007, ULB -- Universite Libre de Bruxelles.
- Julien Gooris & Carine Peeters, 2013.
"Home-Host Country Distance in Offshore Governance Chocies,"
Working Papers ECARES, ULB -- Universite Libre de Bruxelles
ECARES 2013-13, ULB -- Universite Libre de Bruxelles.
- Gooris, Julien & Peeters, Carine, 2014. "Home–Host Country Distance in Offshore Governance Choices," Journal of International Management, Elsevier, Elsevier, vol. 20(1), pages 73-86.
- Davide, Castellani & De Benedictis, Luca & Horgos, Daniel, 2011.
"Can we really trust offshoring indices?,"
Working Paper, Helmut Schmidt University, Hamburg
114/2011, Helmut Schmidt University, Hamburg, revised 21 Jun 2011.
- Manning, Stephan, 2013. "New Silicon Valleys or a new species? Commoditization of knowledge work and the rise of knowledge services clusters," Research Policy, Elsevier, Elsevier, vol. 42(2), pages 379-390.
- repec:wsr:ecbook:2010:i:iv-002 is not listed on IDEAS
- Baier , Elisabeth & Rammer , Christian & Schubert , Torben, 2013.
"The Impact of Innovation Off-shoring on Organizational Adaptability,"
CIRCLE Electronic Working Papers, Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy
2013/44, Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy.
- Baier, Elisabeth & Rammer, Christian & Schuber, Torben, 2013. "The impact on innovation off-shoring on organizational adaptability," ZEW Discussion Papers, ZEW - Zentrum fÃ¼r EuropÃ¤ische Wirtschaftsforschung / Center for European Economic Research 13-109, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Martin Falk, 2013. "New empirical findings for international investment in intangible assets," WWWforEurope Working Papers series, WWWforEurope 30, WWWforEurope.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Elizabeth Gale).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.