Outsourcing, Product Quality, and Contract Enforcement
Posted: 19 Jan 2012
Date Written: Spring 2012
Does outsourcing compromise product quality? Does sound contract enforcement alleviate this concern? We offer a simple model to illustrate how outsourcing leads to lower product quality and how contract enforcement helps mitigate this problem. These theoretical predictions are borne out of a survey of 2,400 firms in China conducted by the World Bank in 2003.
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