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Outsourcing and Firm-level Performance

Author

Listed:
  • Gorzig, Bernd

    (DIW Berlin)

  • Andreas Stephan

Abstract

Using firm-level panel data from the German cost structure survey over the period 1992 to 2000, our empirical analysis shows that firms that increased material inputs relative to internal labor costs performed better in terms of gross operating surplus than other firms. However, firms that increased external services relative to internal labor costs, thus outsourcing service functions previously provided within the firm, performed worse. In sum, our findings support the view that firms tend to overestimate the benefits accruing from outsourcing of services previously provided internally.

Suggested Citation

  • Gorzig, Bernd & Andreas Stephan, 2003. "Outsourcing and Firm-level Performance," Royal Economic Society Annual Conference 2003 90, Royal Economic Society.
    • Handle: RePEc:ecj:ac2003:90
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    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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