Foreign versus domestic outsourcing: Firm-level evidence on the role of technology

Eiichi Tomiura

International Review of Economics & Finance, 2009, vol. 18, issue 2, 219-226

Abstract: The decision about where to outsource varies across firms and industries. General machinery heavily depends on domestic subcontractors, while outsourcing overseas is prevalent in apparel. Based on firm-level data explicitly distinguishing foreign outsourcing from domestic outsourcing in all manufacturing industries, this paper finds that firms tend to prefer domestic outsourcing to foreign outsourcing when they are R&D-intensive. This finding is consistent with incomplete contracting models, since technologically complex products are likely to require high-quality contracting environment and assembler-supplier proximity. This paper also finds that firms connected with computer networks are actively outsourcing.

Keywords: Foreign; outsourcing; Heterogeneity; Firm-level; data; R&; D; Network (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:18:y:2009:i:2:p:219-226

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