Managerial Incentives and the International Organization of Production

Gene M. Grossman and Elhanan Helpman

No 1987, Harvard Institute of Economic Research Working Papers from Harvard - Institute of Economic Research

Abstract: We develop a model in which the heterogeneous firms in an industry choose their modes of organization and the location of their subsidiaries or suppliers. We assume that the principals of a firm are constrained in the nature of the contracts they can write with suppliers or employees. Our main result concerns the sorting of firms with different productivity levels into different organizational forms. We use the model to examine the implications of falling trade costs for the relevant prevalence of outsourcing and foreign direct investment.

Date: 2002
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Related works:
Journal Article: Managerial incentives and the international organization of production (2004)
Working Paper: Managerial Incentives and the International Organization of Production (2003)
Working Paper: Managerial Incentives and the International Organization of Production (2002)
Working Paper: Managerial Incentives and the International Organization of Production (2002)
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