Abstract

http://ssrn.com/abstract=900982
 
 

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Organizing Offshoring: Middle Managers and Communication Costs


Pol Antras


Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Luis Garicano


University of Chicago - Booth School of Business - Economics; Centre for Economic Policy Research (CEPR)

Esteban Rossi-Hansberg


Princeton University - Department of Economics; National Bureau of Economic Research (NBER)

May 2006

NBER Working Paper No. W12196

Abstract:     
Why do firms decide to offshore certain parts of their production process? What qualifies certain countries as particularly attractive locations to offshore? In this paper we address these questions with a theory of international production hierarchies in which organizations arise endogenously to make efficient use of agents' knowledge. Our theory highlights the role of host-country management skills (middle management) in bringing about the emergence of international offshoring. By shielding top management in the source country from routine problems faced by host country workers, the presence of middle managers improves the efficiency of the transmission of knowledge across countries. The model further delivers the prediction that the positive effect of middle skills on offshoring is weaker, the more advanced are communication technologies in the host country. We provide evidence consistent with this prediction.

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Date posted: May 25, 2006  

Suggested Citation

Antras, Pol and Garicano, Luis and Rossi-Hansberg, Esteban, Organizing Offshoring: Middle Managers and Communication Costs (May 2006). NBER Working Paper Series, Vol. w12196, pp. -, 2006. Available at SSRN: http://ssrn.com/abstract=900982

Contact Information

Pol Antras (Contact Author)
Harvard University - Department of Economics ( email )
Littauer Center
Room 230
Cambridge, MA 02138
United States
617-495-1236 (Phone)
617-495-8570 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Luis Garicano
University of Chicago - Booth School of Business - Economics ( email )
Graduate School of Business
1101 East 58th Street
Chicago, IL 60637
United States
773-834-2862 (Phone)
773-702-0458 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Esteban Alejandro Rossi-Hansberg
Princeton University - Department of Economics ( email )
Princeton, NJ
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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