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Productivity, Relationship-Specific Inputs and the Sourcing Modes of Multinationals

  • Defever, Fabrice
  • Toubal, Farid

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.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8656.

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Date of creation: Nov 2011
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Handle: RePEc:cpr:ceprdp:8656
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  1. Gene M. Grossman & Elhanan Helpman, 2002. "Integration Versus Outsourcing In Industry Equilibrium," The Quarterly Journal of Economics, MIT Press, vol. 117(1), pages 85-120, February.
  2. George S Olley & Ariel Pakes, 1992. "The Dynamics Of Productivity In The Telecommunications Equipment Industry," Working Papers 92-2, Center for Economic Studies, U.S. Census Bureau.
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  6. Hart, Oliver D. & Moore, John, 1990. "Property Rights and the Nature of the Firm," Scholarly Articles 3448675, Harvard University Department of Economics.
  7. Nunn, Nathan, 2007. "Relationship-Specificity, Incomplete Contracts, and the Pattern of Trade," Scholarly Articles 4686801, Harvard University Department of Economics.
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  10. Antràs, Pol & Helpman, Elhanan, 2004. "Global Sourcing," CEPR Discussion Papers 4170, C.E.P.R. Discussion Papers.
  11. Egger, Peter & Fahn, Matthias & Merlo, Valeria & Wamser, Georg, 2011. "On the Genesis of Multinational Foreign Affiliate Networks," CEPR Discussion Papers 8536, C.E.P.R. Discussion Papers.
  12. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2013. "Intra-Firm Trade And Product Contractibility," Working Papers 13-12, Center for Economic Studies, U.S. Census Bureau.
  13. Conconi, Paola & Legros, Patrick & Newman, Andrew, 2008. "Trade Liberalization and Organizational Change," CEPR Discussion Papers 7028, C.E.P.R. Discussion Papers.
  14. Hartmut Egger & Udo Kreickemeier, 2011. "Why Foreign Ownership May be Good for You," CESifo Working Paper Series 3631, CESifo Group Munich.
  15. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
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  17. Lafontaine, Francine & Slade, Margaret, 2007. "Vertical Integration and Firm Boundaries : The Evidence," The Warwick Economics Research Paper Series (TWERPS) 799, University of Warwick, Department of Economics.
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  19. Wilhelm Kohler & Marcel Smolka, 2009. "Global Sourcing Decisions and Firm Productivity: Evidence from Spain," CESifo Working Paper Series 2903, CESifo Group Munich.
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  23. Fabrice Defever, 2011. "Incomplete Contracts and the Impact of Globalization on Consumer Welfare," CEP Discussion Papers dp1057, Centre for Economic Performance, LSE.
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  25. repec:ulb:ulbeco:2013/137536 is not listed on IDEAS
  26. Stephen Ross Yeaple, 2006. "Offshoring, Foreign Direct Investment, and the Structure of U.S. Trade," Journal of the European Economic Association, MIT Press, vol. 4(2-3), pages 602-611, 04-05.
  27. Pol Antras, 2004. "Incomplete Contracts and the Product Cycle," 2004 Meeting Papers 19, Society for Economic Dynamics.
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  29. Peter K. Schott, 2004. "Across-product Versus Within-product Specialization in International Trade," The Quarterly Journal of Economics, MIT Press, vol. 119(2), pages 646-677, May.
  30. repec:hrv:faseco:4784029 is not listed on IDEAS
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