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Does IT Outsourcing Increase Firm Success? An Empirical Assessment using Firm-Level Data

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  • Ohnemus, Jörg

Abstract

Using German firm-level data, an endogenous switching regression model within a production function framework is estimated in order to explore differences in labor productivity between IT outsourcing and non-IT outsourcing firms. This approach takes possible complementarities between IT outsourcing and production input factors into account and further allows IT outsourcing to affect any factor of the production function. Estimation results show that IT outsourcing firms produce more efficiently than non-IT outsourcing firms. Furthermore, they have a significantly larger output elasticity with respect to computer workers. Therefore computer workers and IT outsourcing can be interpreted as complementary factors positively affecting firms? labor productivity. An additional analysis indicates that IT outsourcing, in the medium-term, has a positive effect on firms? employment growth rate.

Suggested Citation

  • Ohnemus, Jörg, 2007. "Does IT Outsourcing Increase Firm Success? An Empirical Assessment using Firm-Level Data," ZEW Discussion Papers 07-087, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:7011
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    File URL: https://www.econstor.eu/bitstream/10419/24671/1/dp07087.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Armbruster, Kathrin & Beckmann, Michael & Kuhn, Dieter, 2012. "Task Allocation and Corporate Performance : is There a First-Mover Advantage?," Working papers 2012/07, Faculty of Business and Economics - University of Basel.
    2. Bertschek. Irene & Erdsiek, Daniel, 2012. "IT outsourcing - A source of innovation? Microeconometric evidence for Germany," ZEW Discussion Papers 12-088, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    3. Engelstätter, Benjamin, 2009. "Enterprise systems and labor productivity: disentangling combination effects," ZEW Discussion Papers 09-040, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    4. Bertschek, Irene, 2008. "Wissensvermittlung versus Legitimationsfunktion: Warum engagieren Unternehmen IT-Berater?," ZEW Discussion Papers 08-083, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    5. Breunig, Christoph & Kummer, Michael & Ohnemus, Jörg & Viete, Steffen, 2016. "IT outsourcing and firm productivity: Eliminating bias from selective missingness in the dependent variable," ZEW Discussion Papers 16-092, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    6. Fazlıoğlu, Burcu & Dalgıç, Başak & Yereli, Ahmet Burçin, 2016. "The Effect of Innovation on Productivity: Evidence from Turkish Manufacturing Firms," MPRA Paper 75773, University Library of Munich, Germany.
    7. Ohnemus, Jörg, 2009. "Productivity effects of business process outsourcing: a firm-level investigation based on panel data," ZEW Discussion Papers 09-088, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    8. Peukert, Christian, 2011. "External technology supply and client-side innovation," ZEW Discussion Papers 11-082, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

    More about this item

    Keywords

    IT Outsourcing; Productivity; Endogenous Switching Regression; Employment Growth;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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