Global Sourcing of Complex Production Processes

Christian Schwarz and Jens Suedekum

No 3559, CESifo Working Paper Series from CESifo

Abstract: We develop a theory of a firm in an incomplete contracts environment which decides on its complexity, organization, and global scale. Specifically, the firm decides i) how thinly it wants to slice its production process by choosing the mass of symmetric intermediate inputs that are simultaneously combined to a final product, ii) if the supplier of each component is an external contractor or an integrated affiliate, and iii) if that component is offshored to a foreign country. We also consider the case of asymmetric inputs. Our model leads to a rich set of novel predictions about the structure of multinational firms that are consistent with stylized facts from the recent empirical literature.

Keywords: multinational firms; outsourcing; intra-firm trade; offshoring; vertical FDI (search for similar items in EconPapers)
JEL-codes: D23 F12 L23 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Global sourcing of complex production processes (2014)
Working Paper: Global sourcing of complex production processes (2013)
Working Paper: Global Sourcing of Complex Production Processes (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_3559

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