Organizing Offshoring: Middle Managers and Communication Costs

Pol Antras, Luis Garicano () and Esteban Rossi-Hansberg ()

No 133, 2006 Meeting Papers from Society for Economic Dynamics

Abstract: Why do firms decide to offshore certain parts of their production process? What qualifies certain countries as particularly attractive locations to offshore? In this paper we address these questions with a theory of international production hierarchies in which teams arise endogenously to make efficient use of agents' knowledge. Our theory highlights the role of host-country management skills (middle management) in bringing about the emergence of international offshoring. By shielding top management in the source country from routine problems faced by host country workers, the presence of middle managers improves the efficiency of the transmission of knowledge across countries. The model further delivers the prediction that the positive effect of middle skills on offshoring is weaker, the more advanced are communication technologies in the host country. We provide evidence consistent with this prediction

Keywords: Offshoring; Organizations; FDI (search for similar items in EconPapers)
JEL-codes: F1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec
Date: 2006-12-03

Downloads: (external link)
http://www.princeton.edu/~erossi/EO.pdf main text (application/pdf)
http://repec.org/sed2006/up.32720.1138717341.pdf (application/pdf)

Related works:
Working Paper: Organizing Offshoring: Middle Managers and Communication Costs (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:red:sed006:133

Access Statistics for this paper

More papers in 2006 Meeting Papers from Society for Economic Dynamics
Address: Society for Economic Dynamics Anne Stubing CV Starr Center for Applied Economics 269 Mercer Street, Room 303 New York University New York, NY 10003
Contact information at EDIRC.
Series data maintained by Christian Zimmermann ().