R&D, offshoring, and slicing along a global production chain

Larry Qiu and Mohan Zhou

Asia-Pacific Journal of Accounting & Economics, 2014, vol. 21, issue 1, 18-34

Abstract: This paper analyzes the decision of a multinational firm from a developed country to slice a production chain and to allocate different tasks in the production chain globally. The process involves a wide range of tasks that varies from very routine jobs to research and development (R&D) intensive work. We find that under certain conditions, a drop in offshoring costs (1) leads to more slicing (an increase in the length of production chain) and more offshoring, (2) stimulates R&D, and (3) raises employment in the developed country.

Date: 2014
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DOI: 10.1080/16081625.2014.848510

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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