Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/36164
Authors: 
Görg, Holger
Hanley, Aoife
Year of Publication: 
2009
Series/Report no.: 
IZA Discussion Papers 4404
Abstract: 
We provide a comprehensive empirical analysis of the links between international services outsourcing, domestic outsourcing, profits and innovation using plant level data. We find a positive effect of international outsourcing of services on innovative activity at the plant level. Such a positive effect can also be observed for domestic outsourcing of services, but the magnitude is smaller. This makes intuitive sense, as international outsourcing allows more scope for exploiting international factor price differentials, therefore giving the establishment higher profits and more scope to restructure production activities towards innovation. We also find that international services outsourcing has a positive effect on profitability, as predicted by theory, while this is not true for domestic sourcing. The results are robust to various specifications and an instrumental variables analysis.
Subjects: 
Services outsourcing
offshoring
innovation
R&D
JEL: 
F19
O31
Document Type: 
Working Paper

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