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Capital, Labor, and Boundaries of Offshoring Firms

In: Cross-Border Outsourcing and Boundaries of Japanese Firms

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  • Eiichi Tomiura

    (Hitotsubashi University)

Abstract

While we have examined productivity and innovation in the previous two chapters, this chapter discusses capital-labor ratio and composition of workers in outsourcing firms. Capital intensity is as important as innovation for analyzing the determinants of productivity, particularly labor productivity. In this sense, this chapter is arrayed just after the previous two chapters on productivity and innovation. However, the investigation of capital-labor ratio has been critical for analyzing the outsourcing decision since the seminal work by Grossman and Hart (1986). As some firms are more capital-intensive than other firms even within narrowly defined industries, we exploit firm-level data to consider within-industry variations across firms in capital intensities. We inspect how capital-labor ratio is associated with the firm’s outsourcing decision and how outsourcing affects the boundary of firms, especially in the lens of employment. Labor is further divided into production versus non-production workers, as well as skilled versus unskilled workers. Although it is not directly about outsourcing, this chapter also discusses the firm’s decision of multiplant operation, as it links critically to the ownership and firm boundary.

Suggested Citation

  • Eiichi Tomiura, 2018. "Capital, Labor, and Boundaries of Offshoring Firms," Advances in Japanese Business and Economics, in: Cross-Border Outsourcing and Boundaries of Japanese Firms, chapter 0, pages 157-191, Springer.
    • Handle: RePEc:spr:advchp:978-981-13-0035-6_8
    DOI: 10.1007/978-981-13-0035-6_8
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