Productivity and firm boundaries
Wilhelm Kohler and
Marcel Smolka ()
European Economic Review, 2021, vol. 135, issue C
We use property rights theory to study the effect of productivity on the trade-off between vertical integration and outsourcing at the firm-level. We develop a sharp empirical prediction that is robust across a range of property rights models, holding for single and multiple non-contractible inputs; any fixed cost difference between integration and outsourcing; and regardless of whether production is sequential or simultaneous in nature. Our prediction highlights a hitherto neglected ambiguity of the productivity effect that pushes firms towards integration in headquarter-intensive industries and towards outsourcing in supplier-intensive industries. We find considerable support for this prediction in Spanish firm-level data.
Keywords: Global sourcing; Incomplete contracts; Property rights theory; Firm productivity (search for similar items in EconPapers)
JEL-codes: F12 F19 F23 L22 L23 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
Working Paper: Productivity and Firm Boundaries (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:135:y:2021:i:c:s0014292121000775
Access Statistics for this article
European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer
More articles in European Economic Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().