Services outsourcing and innovation: An empirical investigation
AbstractWe provide a comprehensive empirical analysis of the links between international services outsourcing, domestic outsourcing, profits and innovation using plant level data. We find a positive effect of international outsourcing of services on innovative activity at the plant level. Such a positive effect can also be observed for domestic outsourcing of services, but the magnitude is smaller. This makes intuitive sense, as international outsourcing allows more scope for exploiting international factor price differentials, therefore giving the establishment higher profits and more scope to restructure production activities towards innovation. We also find that international services outsourcing has a positive effect on profitability, as predicted by theory, while this is not true for domestic sourcing. The results are robust to various specifications and an instrumental variables analysis.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7390.
Date of creation: Aug 2009
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- Holger Görg & Aoife Hanley, 2011. "Services Outsourcing And Innovation: An Empirical Investigation," Economic Inquiry, Western Economic Association International, vol. 49(2), pages 321-333, 04.
- Görg, Holger & Hanley, Aoife, 2009. "Services Outsourcing and Innovation: An Empirical Investigation," IZA Discussion Papers 4404, Institute for the Study of Labor (IZA).
- Holger Görg & Aoife Hanley, 2008. "Services Outsourcing and Innovation: An empirical investigation," Kiel Working Papers 1417, Kiel Institute for the World Economy.
- F19 - International Economics - - Trade - - - Other
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-11-27 (All new papers)
- NEP-CSE-2009-11-27 (Economics of Strategic Management)
- NEP-INO-2009-11-27 (Innovation)
- NEP-INT-2009-11-27 (International Trade)
- NEP-KNM-2009-11-27 (Knowledge Management & Knowledge Economy)
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