IDEAS home Printed from https://ideas.repec.org/a/taf/applec/v46y2014i15p1814-1828.html
   My bibliography  Save this article

Assessing the impact of domestic outsourcing and offshoring on productivity at the firm level

Author

Listed:
  • Jos頃. Fari
  • Alberto L󰥺
  • Ana Mart󻑍arcos

Abstract

The purpose of this article is to investigate the effects of domestic and foreign sourcing on firm-level productivity. We develop a simple framework that permits the introduction of both domestic outsourcing and offshoring in a conventional production function. We find that the decision to outsource has a positive impact on the level of productivity as it permits the relocation of parts of the production process to external suppliers. Furthermore, there is a positive impact on output resulting from domestic outsourcing and offshoring like any other input.

Suggested Citation

  • Jos頃. Fari & Alberto L󰥺 & Ana Mart󻑍arcos, 2014. "Assessing the impact of domestic outsourcing and offshoring on productivity at the firm level," Applied Economics, Taylor & Francis Journals, vol. 46(15), pages 1814-1828, May.
    • Handle: RePEc:taf:applec:v:46:y:2014:i:15:p:1814-1828
    DOI: 10.1080/00036846.2014.884704
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00036846.2014.884704
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00036846.2014.884704?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. 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.
    2. Holger Görg & Aoife Hanley & Eric Strobl, 2008. "Productivity effects of international outsourcing: evidence from plant‐level data," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 41(2), pages 670-688, May.
    3. Robert C. Feenstra & Gordon H. Hanson, 1999. "The Impact of Outsourcing and High-Technology Capital on Wages: Estimates For the United States, 1979–1990," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 907-940.
    4. Gene M. Grossman & Elhanan Helpman, 2005. "Outsourcing in a Global Economy," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(1), pages 135-159.
    5. Richard Blundell & Stephen Bond, 2000. "GMM Estimation with persistent panel data: an application to production functions," Econometric Reviews, Taylor & Francis Journals, vol. 19(3), pages 321-340.
    6. Rebecca Riley & Garry Young, 2007. "Skill heterogeneity and equilibrium unemployment," Oxford Economic Papers, Oxford University Press, vol. 59(4), pages 702-725, October.
    7. Delgado, Miguel A. & Farinas, Jose C. & Ruano, Sonia, 2002. "Firm productivity and export markets: a non-parametric approach," Journal of International Economics, Elsevier, vol. 57(2), pages 397-422, August.
    8. Gorg, Holger & Hanley, Aoife, 2005. "International outsourcing and productivity: evidence from the Irish electronics industry," The North American Journal of Economics and Finance, Elsevier, vol. 16(2), pages 255-269, August.
    9. Mary Amiti & Shang‐Jin Wei, 2009. "Service Offshoring and Productivity: Evidence from the US," The World Economy, Wiley Blackwell, vol. 32(2), pages 203-220, February.
    10. Jacques Mairesse & Jordi Jaumandreu, 2005. "Panel‐data Estimates of the Production Function and the Revenue Function: What Difference Does It Make?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(4), pages 651-672, December.
    11. Ornaghi, Carmine, 2008. "Price deflators and the estimation of the production function," Economics Letters, Elsevier, vol. 99(1), pages 168-171, April.
    12. Thomas F. Rutherford & David G. Tarr, 2017. "Trade liberalization, product variety and growth in a small open economy: a quantitative assessment," World Scientific Book Chapters, in: Trade Policies for Development and Transition, chapter 17, pages 389-414, World Scientific Publishing Co. Pte. Ltd..
    13. Helpman, Elhanan, 2011. "Understanding Global Trade," Economics Books, Harvard University Press, number 9780674060784, Spring.
    14. Abraham, Katharine G & Taylor, Susan K, 1996. "Firms' Use of Outside Contractors: Theory and Evidence," Journal of Labor Economics, University of Chicago Press, vol. 14(3), pages 394-424, July.
    15. Jens Matthias Arnold & Katrin Hussinger, 2005. "Export Behavior and Firm Productivity in German Manufacturing: A Firm-Level Analysis," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 141(2), pages 219-243, July.
    16. Fernando Merino & Diego Rodríguez Rodríguez, 2007. "Business services outsourcing by manufacturing firms," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 16(6), pages 1147-1173, December.
    17. Francisco Javier de Miguel & Antonio Manresa, 2008. "Removal of farm subsidies in a regional economy: a computable general equilibrium analysis," Applied Economics, Taylor & Francis Journals, vol. 40(16), pages 2109-2120.
    18. Robert C. Feenstra, 2010. "Offshoring in the Global Economy: Microeconomic Structure and Macroeconomic Implications," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262013835, December.
    19. C. D Mora & A. Triguero-Cano, 2012. "Why do some firms contract out production? Evidence from firm-level panel data," Applied Economics, Taylor & Francis Journals, vol. 44(13), pages 1631-1644, May.
    20. Liza Jabbour, 2010. "Offshoring and Firm Performance: Evidence from French Manufacturing Industry," The World Economy, Wiley Blackwell, vol. 33(3), pages 507-524, March.
    21. van der Werf, Edwin, 2008. "Production functions for climate policy modeling: An empirical analysis," Energy Economics, Elsevier, vol. 30(6), pages 2964-2979, November.
    22. K. Sato, 1967. "A Two-Level Constant-Elasticity-of-Substitution Production Function," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 34(2), pages 201-218.
    23. Gene M. Grossman & Elhanan Helpman, 2002. "Integration versus Outsourcing in Industry Equilibrium," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(1), pages 85-120.
    24. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Segundo Camino‐Mogro & Paul Carrillo‐Maldonado, 2023. "Do imports of intermediate inputs generate higher productivity? Evidence from Ecuadorian manufacturing firms," The World Economy, Wiley Blackwell, vol. 46(5), pages 1471-1521, May.
    2. Caroline Stiel, 2017. "Modern Public Enterprises: Organisational Innovation and Productivity," Discussion Papers of DIW Berlin 1713, DIW Berlin, German Institute for Economic Research.
    3. Kovach, Jeremy J. & Swink, Morgan & Rodriguez, Mauricio, 2023. "A novel measure of firm-level production outsourcing," International Journal of Production Economics, Elsevier, vol. 263(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Catherine J. Morrison Paul & Mahmut Yasar, 2009. "Outsourcing, productivity, and input composition at the plant level," Canadian Journal of Economics, Canadian Economics Association, vol. 42(2), pages 422-439, May.
    2. Ohnemus, Jörg, 2009. "Productivity effects of business process outsourcing: a firm-level investigation based on panel data," ZEW Discussion Papers 09-088, ZEW - Leibniz Centre for European Economic Research.
    3. Alberto López, 2014. "Outsourcing and firm productivity: a production function approach," Empirical Economics, Springer, vol. 47(3), pages 977-998, November.
    4. João Amador & Sónia Cabral, 2014. "Global Value Chains: Surveying Drivers, Measures and Impacts," Working Papers w201403, Banco de Portugal, Economics and Research Department.
    5. Davide Antonioli & Massimiliano Mazzanti & Sandro Montresor & Paolo Pini, 2015. "Outsourcing and Firm Productivity in a Specific Local Production System: Evidence from Reggio Emilia (Italy)," Growth and Change, Wiley Blackwell, vol. 46(2), pages 292-320, June.
    6. Angels Pelegrín & José García-Quevedo, 2012. "Which firms are involved in foreign vertical integration?," Working Papers 2012/38, Institut d'Economia de Barcelona (IEB).
    7. Saibal Kar & Meghna Dutta, 2018. "Outsourcing and Productivity During Economic Crisis: Evidence from Indian Manufacturing Firms," Arthaniti: Journal of Economic Theory and Practice, , vol. 17(2), pages 168-182, December.
    8. Joachim Wagner, 2011. "Offshoring and firm performance: self-selection, effects on performance, or both?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(2), pages 217-247, June.
    9. Lin, Songhua & Ma, Alyson C., 2012. "Outsourcing and productivity: Evidence from Korean data," Journal of Asian Economics, Elsevier, vol. 23(1), pages 39-49.
    10. Aekapol Chongvilaivan & Shandre M. Thangavelu, 2012. "Outsourcing and Labour Productivity: Case of Singapore Manufacturing Sector," SCAPE Policy Research Working Paper Series 1201, National University of Singapore, Department of Economics, SCAPE.
    11. Fabio Pieri & Enrico Zaninotto, 2013. "Vertical integration and efficiency: an application to the Italian machine tool industry," Small Business Economics, Springer, vol. 40(2), pages 397-416, February.
    12. Roger Bandick, 2020. "Global sourcing, productivity and export intensity," The World Economy, Wiley Blackwell, vol. 43(3), pages 615-643, March.
    13. Fergal McCann, 2011. "The heterogeneous effect of international outsourcing on firm productivity," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(1), pages 85-108, April.
    14. José C. Fariñas & Ana Martín‐Marcos, 2010. "Foreign Sourcing and Productivity: Evidence at the Firm Level," The World Economy, Wiley Blackwell, vol. 33(3), pages 482-506, March.
    15. Bruno Merlevede & Angelos Theodorakopoulos, 2016. "Productivity effects from inter-industry offshoring and inshoring: Firm-level evidence from Belgium," FIW Working Paper series 165, FIW.
    16. Holl, Adelheid, 2008. "Production subcontracting and location," Regional Science and Urban Economics, Elsevier, vol. 38(3), pages 299-309, May.
    17. Angels Pelegrín & José García-Quevedo, 2012. "Which firms are involved in foreign vertical integration?," Working Papers 2012/38, Institut d'Economia de Barcelona (IEB).
    18. Martin Falk, 2012. "International Outsourcing and Productivity Growth," Review of Economics and Institutions, Università di Perugia, vol. 3(1).
    19. Dobbelaere, Sabien & Kiyota, Kozo & Mairesse, Jacques, 2015. "Product and labor market imperfections and scale economies: Micro-evidence on France, Japan and the Netherlands," Journal of Comparative Economics, Elsevier, vol. 43(2), pages 290-322.
    20. Elhanan Helpman, 2006. "Trade, FDI, and the Organization of Firms," Journal of Economic Literature, American Economic Association, vol. 44(3), pages 589-630, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:applec:v:46:y:2014:i:15:p:1814-1828. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEC20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.