International Outsourcing versus FDI under Contractual Incompleteness

Valeria Gattai

No 237, Working Papers from University of Milano-Bicocca, Department of Economics

Abstract: This paper empirically analyzes the boundaries of a large sample of Italian multinational enterprises, with firm-level data from Capitalia, AIDA and Centrale dei Bilanci. Within the broad array of feasible contracts in a foreign country, we focus on the trade-off between international outsourcing and Foreign Direct Investment (FDI), in a context of contractual incompleteness. Probit estimates reveal that Italian enterprises operating in highly relation-specific environments are more prone to international outsourcing than FDI, consistently with recent theoretical contributions on the topic. Results are robust to different specifications and alternative measures of contractual incompleteness and international outsourcing.

Keywords: FDI; international outsourcing; contractual incompleteness; Italy (search for similar items in EconPapers)
JEL-codes: C25 F23 (search for similar items in EconPapers)
Pages: 34
Date: 2013-03, Revised 2013-03
New Economics Papers: this item is included in nep-int
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http://repec.dems.unimib.it/repec/pdf/mibwpaper237.pdf First version, 2013 (application/pdf)

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Journal Article: International outsourcing versus FDI under contractual incompleteness (2013)
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