Outsourcing and Offshoring of Business Services: How Important is ICT?

Laura Abramovsky and Rachel Griffith

Journal of the European Economic Association, 2006, vol. 4, issue 2-3, 594-601

Abstract: This paper considers the impact that information and communication technology (ICT) has on firms' choices over organisational form. In particular, the decision over whether to produce in-house or outsource services, and the decision over the location of activity. ICT reduces the transaction and adjustment costs of moving activity outside the firm, and of carrying it out at greater geographicdistance. We find that more ICT-intensive firms purchase a greater amount of services on the market and they are more likely to purchase offshore than less ICT-intensive firms. (JEL: D21, F23, L23) (c) 2006 by the European Economic Association.

Date: 2006
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