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Does Offshoring Pay? Firm-Level Evidence from Japan (2010)
| Citations: | 15 - 0 self |
BibTeX
@MISC{Hijzen10doesoffshoring,
author = {Alexander Hijzen and Inui Tomohiko and Todo Yasuyuki and Aoyama Gakuin and Er Hijzen and Tomohiko Inui and Yasuyuki Todo},
title = {Does Offshoring Pay? Firm-Level Evidence from Japan},
year = {2010}
}
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Abstract
This paper explores the impact of offshoring, or contracting out of business activities to foreign providers, on firm productivity, using Japanese firm-level data for the period 1994-2000. We find that offshoring has generally a positive effect on productivity growth. This effect is robust to controlling for the possible endogeneity of offshoring with respect to unobserved productivity shocks. Our preferred specification suggests that a one percent increase in offshoring intensity raises productivity growth by 0.17 percent. For the average offshoring firm this implies a 1.8 percent increase in annual productivity growth. These results do not appear to depend much on either the level of technological sophistication of a firms ’ industry or a firms ’ international orientation. However, we find that the scope for productivity improvements from offshoring depends negatively on the initial level of productivity of the firm.
Keyphrases
firm-level evidence percent increase productivity growth initial level unobserved productivity shock firm productivity foreign provider average offshoring firm annual productivity growth preferred specification business activity possible endogeneity firm industry technological sophistication firm international orientation productivity improvement japanese firm-level data positive effect
