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What happened to foreign outsourcing when firms went online?

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  • Hanley, Aoife
  • Ott, Ingrid

Abstract

The possibility to outsource over the internet should revolutionize foreign outsourcing, especially for services (UNCTAD, 2004). Our model describes materials and services input allocation from domestic vs. foreign suppliers. Allocations change when firms outsource online due to access and competition effects. Using data for 99 firms who started outsourcing online in 2003 together with a control group (never outsourcing online) of over 682 Irish firms, we apply OLS and Propensity Score Matching with Difference-in-Differences to find that 42-48 percent of foreign services inputs growth arises from online outsourcing.

Suggested Citation

  • Hanley, Aoife & Ott, Ingrid, 2012. "What happened to foreign outsourcing when firms went online?," Kiel Working Papers 1774, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1774
    as

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    References listed on IDEAS

    as
    1. Laura Abramovsky & Rachel Griffith, 2006. "Outsourcing and Offshoring of Business Services: How Important is ICT?," Journal of the European Economic Association, MIT Press, vol. 4(2-3), pages 594-601, 04-05.
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    More about this item

    Keywords

    International Outsourcing; Propensity Score Matching; Input Price Uncertainty; Input Demand;
    All these keywords.

    JEL classification:

    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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