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Outsourcing, Foreign Ownership, and Productivity: Evidence from UK Establishment‐level Data
Author(s) -
Girma Sourafel,
Görg Holger
Publication year - 2004
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/j.1467-9396.2004.00483.x
Subject(s) - outsourcing , productivity , knowledge process outsourcing , business , foreign ownership , labour economics , empirical evidence , industrial organization , economics , foreign direct investment , marketing , economic growth , macroeconomics , philosophy , epistemology
Abstract The paper presents an empirical analysis of “outsourcing” using establishment‐level data for UK manufacturing industries. The authors analyze an establishment's decision to outsource and the subsequent effects of outsourcing on the establishment's productivity. Outsourcing is compared in domestic with foreign‐owned establishments. The empirical results suggest that high wages are positively related to outsourcing, suggesting that the cost‐saving motive is important. Foreign‐owned firms have higher levels of outsourcing than domestic establishments. In the productivity analysis, an establishment's outsourcing intensity is positively related to its labor productivity and total factor productivity growth, and this effect is more pronounced for foreign establishments.