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Trade in Tasks and the Organization of Firms

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  • Schymik, Jan
  • Marin, Dalia
  • Tarasov, Alexander

Abstract

We incorporate trade in tasks l a Grossman and Rossi-Hansberg (2008) into the international trade theory of fi rm organization of Marin and Verdier (2012) to examine how off shoring aff ects the way fi rms organize. We test the predictions of the model based on firm level data of 660 Austrian and German multinational firms with 2200 subsidiaries in Eastern Europe and we show that the data are consistent with the theory. We fi nd that o ffshoring of production tasks leads firms to reorganize to more decentralized management improving competitiveness of offshoring firms. We show further that offshoring of skilled managers relaxes the 'war for talent' constraint but toughens competition and thus has an ambiguous impact on the level of decentralization and CEO wages of offshoring firms. In sufficiently open economies, however, managerial offshoring unambiguously leads to more decentralized management.

Suggested Citation

  • Schymik, Jan & Marin, Dalia & Tarasov, Alexander, 2014. "Trade in Tasks and the Organization of Firms," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100633, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc14:100633
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    Cited by:

    1. Luis Garicano & Esteban Rossi-Hansberg, 2015. "Knowledge-Based Hierarchies: Using Organizations to Understand the Economy," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 1-30, August.
    2. Boddin, Dominik & Henze, Philipp, 2015. "International trade and the occupational mix in manufacturing: Evidence from german micro data," Economics Working Papers 2015-05, Christian-Albrechts-University of Kiel, Department of Economics.
    3. Konstantin Koerner & Michael Moritz & Johannes Schäffler, 2022. "Foreign direct investment and onshore employment dynamics: Evidence from German firms with affiliates in the Czech Republic," The World Economy, Wiley Blackwell, vol. 45(6), pages 1773-1829, June.
    4. Anna Gumpert, 2018. "The Organization of Knowledge in Multinational Firms," Journal of the European Economic Association, European Economic Association, vol. 16(6), pages 1929-1976.
    5. Beata Javorcik & Steven Poelhekke, 2017. "Former Foreign Affiliates: Cast Out and Outperformed?," Journal of the European Economic Association, European Economic Association, vol. 15(3), pages 501-539.
    6. Schymik, Jan, 2013. "Trade, Technologies and the Talent Organization," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79922, Verein für Socialpolitik / German Economic Association.
    7. Beata Javorcik & Steven Poelhekke, 2017. "Former Foreign Affiliates: Cast Out and Outperformed?," Journal of the European Economic Association, European Economic Association, vol. 15(3), pages 501-539.
    8. Hiller, Victor & Raffin, Natacha, 2020. "Firms’ social responsibility and workers’ motivation at the industry equilibrium," Journal of Economic Behavior & Organization, Elsevier, vol. 174(C), pages 131-149.
    9. Zarepour, Zahra & Wagner, Natascha, 2023. "How manufacturing firms respond to energy subsidy reforms? An impact assessment of the Iranian Energy Subsidy Reform," Energy Economics, Elsevier, vol. 124(C).
    10. KODAMA Naomi & Beata S. JAVORCIK & ABE Yukiko, 2016. "Transplanting Corporate Culture across International Borders: FDI and female employment in Japan," Discussion papers 16015, Research Institute of Economy, Trade and Industry (RIETI).
    11. Schymik, Jan, 2018. "Globalization and the evolution of corporate governance," European Economic Review, Elsevier, vol. 102(C), pages 39-61.
    12. Schymik, Jan Simon, 2015. "Trade, Technologies, and the Evolution of Corporate Governance," Discussion Papers in Economics 24871, University of Munich, Department of Economics.
    13. Konstantin Koerner & Mathilde Le Moigne, 2023. "FDI and onshore task composition: evidence from German firms with affiliates in the Czech Republic," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 57(1), pages 1-42, December.
    14. Schymik, Jan, 2017. "Earnings Inequality and the Global Division of Labor: Evidence from the Executive Labor Market," Discussion Papers in Economics 38385, University of Munich, Department of Economics.

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    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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