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Productivity, relationship-specific inputs and the sourcing modes of multinationals

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  • Defever, Fabrice
  • Toubal, Farid

Abstract

We investigate the roles of productivity and the specificity of inputs for the international sourcing strategy of firms which are part of a multinational network. We present a framework in which firms decide to import from a foreign independent supplier or from their related party abroad according to these two dimensions. We use a detailed survey that provides a detailed geographical breakdown of French firms’ imports at the product level as well as the sourcing mode used for each transaction. The dataset also provides information to estimate the firms’ productivity and their intensity in relationship-specific inputs. After controlling for countries of origin, products and sectors specific effects, the empirical results provide evidence that for the most productive multinationals the likelihood of trading through an independent supplier is higher especially if they use relationship-specific inputs intensively.

Suggested Citation

  • Defever, Fabrice & Toubal, Farid, 2013. "Productivity, relationship-specific inputs and the sourcing modes of multinationals," Journal of Economic Behavior & Organization, Elsevier, vol. 94(C), pages 345-357.
  • Handle: RePEc:eee:jeborg:v:94:y:2013:i:c:p:345-357
    DOI: 10.1016/j.jebo.2012.11.006
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    1. repec:bla:reviec:v:25:y:2017:i:3:p:626-648 is not listed on IDEAS
    2. Vilas Pathikonda & Thomas Farole, 2017. "The Capabilities Driving Participation in Global Value Chains," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 8(01), pages 1-26, February.
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    14. Carluccio, Juan & Bas, Maria, 2015. "The impact of worker bargaining power on the organization of global firms," Journal of International Economics, Elsevier, vol. 96(1), pages 162-181.
    15. ZHU Lianming & ITO Koji & TOMIURA Eiichi, 2016. "Global Sourcing in the Wake of Disaster: Evidence from the Great East Japan Earthquake," Discussion papers 16089, Research Institute of Economy, Trade and Industry (RIETI).
    16. Eppinger, Peter S. & Kukharskyy, Bohdan, 2017. "Contracting institutions and firm boundaries," University of Tuebingen Working Papers in Economics and Finance 100, University of Tuebingen, Faculty of Economics and Social Sciences.
    17. Del Prete, Davide & Rungi, Armando, 2017. "Organizing the global value chain: A firm-level test," Journal of International Economics, Elsevier, vol. 109(C), pages 16-30.
    18. Smolka, Marcel & Kohler, Wilhelm, 2015. "Global Sourcing of Heterogeneous Firms: Theory and Evidence," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113012, Verein für Socialpolitik / German Economic Association.
    19. João Amador & Sónia Cabral, 2014. "Global Value Chains: Surveying Drivers, Measures and Impacts," Working Papers w201403, Banco de Portugal, Economics and Research Department.
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    More about this item

    Keywords

    Productivity; Incomplete contracts; Intra-group trade; Outsourcing;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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