Advanced Search
MyIDEAS: Login to save this paper or follow this series

Outsourcing and Technological Change

Contents:

Author Info

  • Bartel, Ann P.

    ()
    (Columbia University)

  • Lach, Saul

    ()
    (Hebrew University, Jerusalem)

  • Sicherman, Nachum

    ()
    (Columbia University)

Abstract

We present a dynamic model where the probability of outsourcing production is increasing in the firm’s expectation of technological change. As the pace of innovations in production technologies increases, the less time the firm has to amortize the sunk costs associated with purchasing and adopting new technologies to produce in-house. Therefore, purchasing from market suppliers, who can afford to use the latest technology, becomes relatively cheaper. The predictions of the model are tested using a panel dataset on Spanish firms for the time period 1990 through 2002. In order to address potential endogeneity problems, we use an exogenous proxy for technological change, namely the number of patents granted by the U.S. patent office classified by technological class. We map the technological classes to the Spanish industrial sectors in which the patents are used and provide causal evidence of the impact of expected technological change on the likelihood and extent of production outsourcing. No prior study has been able to provide such causal evidence. Our results are robust to the inclusion of detailed characteristics of the firms as well as firm fixed effects.

Download Info

If 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.
File URL: http://ftp.iza.org/dp4678.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4678.

as in new window
Length: 43 pages
Date of creation: Dec 2009
Date of revision:
Handle: RePEc:iza:izadps:dp4678

Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org

Order Information:
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Email:

Related research

Keywords: outsourcing; technological change;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Holger Görg & Aoife Hanley, 2011. "Services Outsourcing And Innovation: An Empirical Investigation," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 49(2), pages 321-333, 04.
  2. Carmen Díaz-Mora, 2005. "DETERMINANTS OF OUTSOURCING PRODUCTION: A Dynamic Panel Data Approach for Manufacturing Industries," Working Papers, Asociación Española de Economía y Finanzas Internacionales 05-07, Asociación Española de Economía y Finanzas Internacionales.
  3. Susan N. Houseman & Anne E. Polivka, 1999. "The Implications of Flexible Staffing Arrangements for Job Stability," Upjohn Working Papers and Journal Articles, W.E. Upjohn Institute for Employment Research 99-56, W.E. Upjohn Institute for Employment Research.
  4. Grossman, Sanford J. & Hart, Oliver D., 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Scholarly Articles 3450060, Harvard University Department of Economics.
  5. Gene M. Grossman & Elhanan Helpman, 2003. "Outsourcing Versus FDI in Industry Equilibrium," Journal of the European Economic Association, MIT Press, MIT Press, vol. 1(2-3), pages 317-327, 04/05.
  6. Alla Lileeva & Johannes Van Biesebroeck, 2013. "Outsourcing When Investments Are Specific And Interrelated," Journal of the European Economic Association, European Economic Association, European Economic Association, vol. 11(4), pages 871-896, 08.
  7. Nunn, Nathan, 2007. "Relationship-Specificity, Incomplete Contracts, and the Pattern of Trade," Scholarly Articles 4686801, Harvard University Department of Economics.
  8. Pol Antras, 2004. "Incomplete Contracts and the Product Cycle," Econometric Society 2004 North American Summer Meetings, Econometric Society 62, Econometric Society.
  9. Marcello Estevao & Saul Lach, 1999. "Measuring Temporary Labor Outsourcing in U.S. Manufacturing," NBER Working Papers 7421, National Bureau of Economic Research, Inc.
  10. Robert C. Feenstra & Gordon H. Hanson, 1999. "The Impact Of Outsourcing And High-Technology Capital On Wages: Estimates For The United States, 1979-1990," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 114(3), pages 907-940, August.
  11. Yukako Ono, 2001. "Outsourcing business service and the scope of local markets," Working Paper Series, Federal Reserve Bank of Chicago WP-01-09, Federal Reserve Bank of Chicago.
  12. Daniel K.N. Johnson, 2002. "The OECD Technology Concordance (OTC): Patents by Industry of Manufacture and Sector of Use," OECD Science, Technology and Industry Working Papers 2002/5, OECD Publishing.
  13. Pol Antr�s, 2005. "Property Rights and the International Organization of Production," American Economic Review, American Economic Association, American Economic Association, vol. 95(2), pages 25-32, May.
  14. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 99(397), pages 569-96, September.
  15. Laura Abramovsky & Rachel Griffith, 2006. "Outsourcing and Offshoring of Business Services: How Important is ICT?," Journal of the European Economic Association, MIT Press, MIT Press, vol. 4(2-3), pages 594-601, 04-05.
  16. David H. Autor, 2000. "Why Do Temporary Help Firms Provide Free General Skills Training?," NBER Working Papers 7637, National Bureau of Economic Research, Inc.
  17. Thomas N. Hubbard, 2008. "Viewpoint: Empirical research on firms' boundaries," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 41(2), pages 341-359, May.
  18. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 1999. "Information Technology, Workplace Organization and the Demand for Skilled Labor: Firm-Level Evidence," NBER Working Papers 7136, National Bureau of Economic Research, Inc.
  19. Aghion, Philippe & Howitt, Peter & Violante, Giovanni L, 2000. "General Purpose Technology and Within-Group Inequality," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2474, C.E.P.R. Discussion Papers.
  20. Allen, Steven G, 2001. "Technology and the Wage Structure," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 19(2), pages 440-83, April.
  21. Marcello Estevao & Saul Lach, 1999. "The evolution of the demand for temporary help supply employment in the United States," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 1999-58, Board of Governors of the Federal Reserve System (U.S.).
  22. Yukako Ono, 2000. "Outsourcing Business Service and the Scope of Local Markets," Working Papers, Center for Economic Studies, U.S. Census Bureau 00-14, Center for Economic Studies, U.S. Census Bureau.
  23. Welch, F, 1970. "Education in Production," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 78(1), pages 35-59, Jan.-Feb..
  24. Ann Bartel & Casey Ichniowski & Kathryn Shaw, 2007. "How Does Information Technology Affect Productivity? Plant-Level Comparisons of Product Innovation, Process Improvement, and Worker Skills," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 122(4), pages 1721-1758, November.
  25. David H. Autor, 2000. "Outsourcing at Will: Unjust Dismissal Doctrine and the Growth of Temporary Help Employment," NBER Working Papers 7557, National Bureau of Economic Research, Inc.
  26. Susan N. Houseman, 2001. "Why employers use flexible staffing arrangements: Evidence from an establishment survey," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 55(1), pages 149-170, October.
  27. Abraham, Katharine G & Taylor, Susan K, 1996. "Firms' Use of Outside Contractors: Theory and Evidence," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 14(3), pages 394-424, July.
  28. Susan N. Houseman, . "Why Employers Use Flexible Staffing Arrangements: Evidence from an Establishment Survey," Upjohn Working Papers and Journal Articles, W.E. Upjohn Institute for Employment Research snh2001, W.E. Upjohn Institute for Employment Research.
  29. George P. Baker & Thomas N. Hubbard, 2003. "Make Versus Buy in Trucking: Asset Ownership, Job Design, and Information," American Economic Review, American Economic Association, American Economic Association, vol. 93(3), pages 551-572, June.
  30. Lach, Saul & Schankerman, Mark, 1989. "Dynamics of R&D and Investment in the Scientific Sector," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 97(4), pages 880-904, August.
  31. Lewis, Tracy R & Sappington, David E M, 1991. "Technological Change and the Boundaries of the Firm," American Economic Review, American Economic Association, American Economic Association, vol. 81(4), pages 887-900, September.
  32. Gibbons, Robert, 2005. "Four forma(lizable) theories of the firm?," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 58(2), pages 200-245, October.
  33. Mary Amiti & Shang-Jin Wei, 2006. "Service Offshoring and Productivity: Evidence from the United States," NBER Working Papers 11926, National Bureau of Economic Research, Inc.
  34. C. Lanier Benkard, 2000. "Learning and Forgetting: The Dynamics of Aircraft Production," American Economic Review, American Economic Association, American Economic Association, vol. 90(4), pages 1034-1054, September.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp4678. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).

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.