Productivity, Relationship-Specific Inputs and the Sourcing Modes of Multinationals

Farid Toubal and Fabrice Defever

No 8656, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We investigate the roles of productivity and the specificity of inputs for the international sourcing strategy of firms which are part of a multinational network. We present a framework in which firms decide to import from a foreign independent supplier or from their related party abroad according to these two dimensions. We use a detailed survey that provides a detailed geographical breakdown of French firms' imports at the product level as well as the sourcing mode used for each transaction. The dataset also provides information to estimate the firms' productivity and their intensity in relationship-specific inputs. After controlling for countries of origin, products and sectors specific effects, the empirical results provide evidence that for the most productive multinationals the likelihood of trading through an independent supplier is higher especially if they use relationship-specific inputs intensively.

Keywords: Productivity; Incomplete contracts; Intra-group trade; Outsourcing (search for similar items in EconPapers)
JEL-codes: F14 F23 L22 L23 (search for similar items in EconPapers)
Date: 2011-11
New Economics Papers: this item is included in nep-cse, nep-eff and nep-int
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Citations: View citations in EconPapers (15)

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Related works:
Journal Article: Productivity, relationship-specific inputs and the sourcing modes of multinationals (2013)
Working Paper: Productivity, relationship-specific inputs and the sourcing modes of multinationals (2013)
Working Paper: Productivity, relationship-specific inputs and the sourcing modes of multinationals (2013)
Working Paper: Productivity, relationship-specific inputs and the sourcing modes of multinationals (2013)
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