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Outsourcing, Foreign Ownership, and Productivity: Evidence from UK Establishment-level Data

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  • Sourafel Girma
  • Holger Görg

Abstract

The paper presents an empirical analysis of "outsourcing" using establishment-level data for UK manufacturing industries. The authors analyze an establishment's decision to outsource and the subsequent effects of outsourcing on the establishment's productivity. Outsourcing is compared in domestic with foreign-owned establishments. The empirical results suggest that high wages are positively related to outsourcing, suggesting that the cost-saving motive is important. Foreign-owned firms have higher levels of outsourcing than domestic establishments. In the productivity analysis, an establishment's outsourcing intensity is positively related to its labor productivity and total factor productivity growth, and this effect is more pronounced for foreign establishments. Copyright Blackwell Publishing Ltd 2004..

Suggested Citation

  • Sourafel Girma & Holger Görg, 2004. "Outsourcing, Foreign Ownership, and Productivity: Evidence from UK Establishment-level Data," Review of International Economics, Wiley Blackwell, vol. 12(5), pages 817-832, November.
  • Handle: RePEc:bla:reviec:v:12:y:2004:i:5:p:817-832
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    References listed on IDEAS

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    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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