Productivity and the Sourcing Modes of Multinational Firms: Evidence from French Firm-Level Data

Fabrice Defever and Farid Toubal

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: We investigate the role of a firm's total factor productivity in its decision to import from their affiliates rather than from independent input suppliers. We propose a slightly modified version of the Antràs and Helpman (2004) model. We assume higher fixed costs under outsourcing and a firm-specific production function. We use detailed French firm-level data that provides a geographical breakdown of French firms' import at product level and their sourcing modes in 1999. We find strong empirical support for the theoretical predictions of the model. In particular, high-productivity firms that have a production process intensive in suppliers' inputs source their inputs through independent foreign suppliers.

Keywords: Productivity; Incomplete Contracts; Intra-firm Trade; Outsourcing (search for similar items in EconPapers)
JEL-codes: F14 F23 L22 L23 (search for similar items in EconPapers)
Date: 2007-12
New Economics Papers: this item is included in nep-bec, nep-cse, nep-eff and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (60)

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Working Paper: Productivity and the sourcing modes of multinational firms: evidence from French firm-level data (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp0842

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