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 Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4404.
Length: 30 pages
Date of creation: Sep 2009
Date of revision:
Publication status: published in: Economic Inquiry, 2011, 49(2), 321-333
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Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Other versions of this item:
- 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.
- Holger Görg & Aoife Hanley, 2008. "Services Outsourcing and Innovation: An empirical investigation," Kiel Working Papers 1417, Kiel Institute for the World Economy.
- Görg, Holger & Hanley, Aoife, 2009. "Services outsourcing and innovation: An empirical investigation," CEPR Discussion Papers 7390, C.E.P.R. Discussion Papers.
- 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-2009-10-10 (All new papers)
- NEP-INO-2009-10-10 (Innovation)
- NEP-KNM-2009-10-10 (Knowledge Management & Knowledge Economy)
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