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Offshoring of Japanese Small and Medium Enterprises (Japanese)

  • KWON Hyeog Ug

This paper uses firm-level data to examine the determinants and impacts of offshoring of small and medium enterprises (SMEs) in Japan, comparing results with those for larger firms from existing studies. The results of this paper can be summarized as follows. First, offshoring of Japanese SMEs is largely determined by the time preference and overseas experience of the chief executive officer (CEO) and not by the productivity level. In fact, existing studies using data for larger firms found mixed results on the effect of productivity on offshoring decisions. Second, while intra-firm offshoring does not seem to improve productivity, arm's-length offshoring has a positive effect. This is opposite to the result using data for larger firms. Finally, offshoring of SMEs does not significantly affect the level of domestic employment, while it leads to a higher demand for more educated workers. This result is consistent with results for larger firms.

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Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion Papers (Japanese) with number 12004.

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Length: 28 pages
Date of creation: Mar 2012
Date of revision:
Handle: RePEc:eti:rdpsjp:12004
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  1. Antras, Pol & Helpman, Elhanan, 2004. "Global Sourcing," Scholarly Articles 3196327, Harvard University Department of Economics.
  2. Alexander HIJZEN & INUI Tomohiko & TODO Yasuyuki, 2007. "Does Offshoring Pay? Firm-Level Evidence from Japan," Discussion papers 07005, Research Institute of Economy, Trade and Industry (RIETI).
  3. Yongmin Chen & Ignatius J. Horstmann & James R. Markusen, 2012. "Physical capital, knowledge capital, and the choice between FDI and outsourcing," Canadian Journal of Economics, Canadian Economics Association, vol. 45(1), pages 1-15, February.
  4. Sanghoon Ahn & Kyoji Fukao & Keiko Ito, 2008. "The Impact of Outsourcing on the Japanese and South Korean Labor Markets: International Outsourcing of Intermediate Inputs and Assembly in East Asia," Global COE Hi-Stat Discussion Paper Series gd08-001, Institute of Economic Research, Hitotsubashi University.
  5. Cramer, J. S. & Hartog, J. & Jonker, N. & Van Praag, C. M., 2002. "Low risk aversion encourages the choice for entrepreneurship: an empirical test of a truism," Journal of Economic Behavior & Organization, Elsevier, vol. 48(1), pages 29-36, May.
  6. Grossman, Sanford J & Hart, Oliver, 1985. "The Cost and Benefits of Ownership: A Theory of Vertical and Lateral Integration," CEPR Discussion Papers 70, C.E.P.R. Discussion Papers.
  7. JINJI Naoto & ZHANG Xingyuan & HARUNA Shoji, 2011. "Does Tobin's q Matter for Firms' Choices of Globalization Mode?," Discussion papers 11061, Research Institute of Economy, Trade and Industry (RIETI).
  8. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
  9. Ryuhei Wakasugi & Banri Ito & Eiichi Tomiura, 2008. "Offshoring and Trade in East Asia: A Statistical Analysis," Asian Economic Papers, MIT Press, vol. 7(3), pages 101-124, October.
  10. Eiichi Tomiura & Banri Ito & Ryuhei Wakasugi, 2011. "Offshore Outsourcing Decision And Capital Intensity: Firm‐Level Relationships," Economic Inquiry, Western Economic Association International, vol. 49(2), pages 364-378, 04.
  11. Agnese, Pablo, 2009. "Japan and her dealings with offshoring: An empirical analysis with aggregate data," IESE Research Papers D/793, IESE Business School.
  12. Head, Keith & Ries, John, 2002. "Offshore production and skill upgrading by Japanese manufacturing firms," Journal of International Economics, Elsevier, vol. 58(1), pages 81-105, October.
  13. Holger Görg & Aoife Hanley & Eric Strobl, 2008. "Productivity effects of international outsourcing: evidence from plant-level data," Canadian Journal of Economics, Canadian Economics Association, vol. 41(2), pages 670-688, May.
  14. Nobuaki Yamashita, 2008. "The Impact of Production Fragmentation on Skill Upgrading: New Evidence from Japanese Manufacturing," Departmental Working Papers 2008-06, The Australian National University, Arndt-Corden Department of Economics.
  15. Antras, Pol, 2003. "Firms, Contracts, and Trade Structure," Scholarly Articles 3196328, Harvard University Department of Economics.
  16. M Arellano & O Bover, 1990. "Another Look at the Instrumental Variable Estimation of Error-Components Models," CEP Discussion Papers dp0007, Centre for Economic Performance, LSE.
  17. ITO Keiko & TANAKA Kiyoyasu, 2010. "Does Material and Service Offshoring Improve Domestic Productivity? Evidence from Japanese manufacturing industries," Discussion papers 10010, Research Institute of Economy, Trade and Industry (RIETI).
  18. 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.
  19. TODO Yasuyuki & SATO Hitoshi, 2011. "Effects of CEOs' Characteristics on Internationalization of Small and Medium Enterprises in Japan," Discussion papers 11026, Research Institute of Economy, Trade and Industry (RIETI).
  20. Eiichi Tomiura, 2005. "Foreign Outsourcing, Exporting, and FDI: A Productivity Comparison at the Firm Level," Discussion Paper Series 168, Research Institute for Economics & Business Administration, Kobe University.
  21. Tomomi Tanaka & Colin F. Camerer & Quang Nguyen, 2010. "Risk and Time Preferences: Linking Experimental and Household Survey Data from Vietnam," American Economic Review, American Economic Association, vol. 100(1), pages 557-71, March.
  22. Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
  23. ITO Banri & WAKASUGI Ryuhei & TOMIURA Eiichi, 2008. "Offshoring and Productivity: Evidence from Japanese Firm-level Data," Discussion papers 08028, Research Institute of Economy, Trade and Industry (RIETI).
  24. Nobuaki Yamashita & Kyoji Fukao, 2009. "Expansion Abroad and Jobs at Home - Evidence from Japanese Multinational Enterprises," Macroeconomics Working Papers 22707, East Asian Bureau of Economic Research.
  25. Pablo, Agnese, 2009. "Employment effects of offshoring. An application to Japanese industries, 1980-2005," MPRA Paper 16506, University Library of Munich, Germany.
  26. Pol Antràs, 2003. "Firms, Contracts, and Trade Structure," The Quarterly Journal of Economics, Oxford University Press, vol. 118(4), pages 1375-1418.
  27. Pablo, Agnese & Joan Enric, Ricart, 2009. "Offshoring: Facts and numbers at the country level," MPRA Paper 16503, University Library of Munich, Germany.
  28. repec:hrv:faseco:4784029 is not listed on IDEAS
  29. Jose Manuel Campa & Linda S. Goldberg, 1997. "The evolving external orientation of manufacturing: a profile of four countries," Economic Policy Review, Federal Reserve Bank of New York, issue Jul, pages 53-81.
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