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Does IT Outsourcing Increase Firm Success? An Empirical Assessment using Firm-Level Data

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  • Ohnemus, Jörg

Abstract

Using German firm-level data, an endogenous switching regression model within a production function framework is estimated in order to explore differences in labor productivity between IT outsourcing and non-IT outsourcing firms. This approach takes possible complementarities between IT outsourcing and production input factors into account and further allows IT outsourcing to affect any factor of the production function. Estimation results show that IT outsourcing firms produce more efficiently than non-IT outsourcing firms. Furthermore, they have a significantly larger output elasticity with respect to computer workers. Therefore computer workers and IT outsourcing can be interpreted as complementary factors positively affecting firms? labor productivity. An additional analysis indicates that IT outsourcing, in the medium-term, has a positive effect on firms? employment growth rate. --

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Bibliographic Info

Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 07-087.

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Date of creation: 2007
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Handle: RePEc:zbw:zewdip:7011

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Keywords: IT Outsourcing; Productivity; Endogenous Switching Regression; Employment Growth;

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Cited by:
  1. Bertschek. Irene & Erdsiek, Daniel, 2012. "IT outsourcing - A source of innovation? Microeconometric evidence for Germany," ZEW Discussion Papers 12-088, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Kathrin Armbruster & Michael Beckmann & Dieter Kuhn, 2012. "Task Allocation and Corporate Performance: Is There a First-Mover Advantage?," Working papers 2012/07, Faculty of Business and Economics - University of Basel.
  3. Peukert, Christian, 2011. "External technology supply and client-side innovation," ZEW Discussion Papers 11-082, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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