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Does Outsourcing Increase Profitability?

Author

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  • Holger Görg

    (University of Nottingham and DIW Berlin)

  • Aoife Hanley

    (University of Nottingham Trinity College Dublin)

Abstract

We investigate the relationship between outsourcing and profitability paying particular attention to the endogeneity of outsourcing. The empirical analysis uses unique plant level data for the electronics sector in Ireland. A particular feature of the data is that it records detailed information for 12 electronics sub-sectors covering both manufacturing and services activities. We distinguish outsourcing of materials from outsourcing of services inputs. We find that plants that are substantially larger than the mean employment size benefit from outsourcing materials while this does not appear to be the case for small plants. Results for outsourcing of services are not as clear-cut, however.

Suggested Citation

  • Holger Görg & Aoife Hanley, 2004. "Does Outsourcing Increase Profitability?," The Economic and Social Review, Economic and Social Studies, vol. 35(3), pages 267-288.
    • Handle: RePEc:eso:journl:v:35:y:2004:i:3:p:267-288
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment

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