Global Sourcing Decisions and Firm Productivity: Evidence from Spain

43 Pages Posted: 16 Jan 2010

See all articles by Wilhelm Kohler

Wilhelm Kohler

University of Tuebingen - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Marcel Smolka

University of Flensburg

Date Written: December 2009

Abstract

We investigate the link between productivity of firms and their sourcing behavior. Following Antràs & Helpman (2004) we distinguish between domestic and foreign sourcing, as well as between outsourcing and vertical integration. A firm’s choice is driven by a hold-up problem caused by lack of enforceable contracts. We use Spanish firm-level data to examine the productivity premia associated with the different sourcing strategies. We find strong empirical support for the predictions of the model.

Keywords: productivity, outsourcing, intra-firm trade, foreign direct investment, incomplete contracts, firm-level data

JEL Classification: F14, F23, L22, L23

Suggested Citation

Kohler, Wilhelm K. and Smolka, Marcel, Global Sourcing Decisions and Firm Productivity: Evidence from Spain (December 2009). CESifo Working Paper Series No. 2903, Available at SSRN: https://ssrn.com/abstract=1536430 or http://dx.doi.org/10.2139/ssrn.1536430

Wilhelm K. Kohler (Contact Author)

University of Tuebingen - Department of Economics ( email )

Mohlstrasse 36
D-72074 Tuebingen, 72074
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Marcel Smolka

University of Flensburg ( email )

Auf dem Campus 1
Flensburg, 24943
Germany

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