Outsourcing and Productivity During Economic Crisis: Evidence from Indian Manufacturing Firms

Kar S., and Dutta, M. (2018), "Outsourcing and Productivity During Economic Crisis: Evidence from Indian Manufacturing Firms", Arthaniti-Journal of Economic Theory and Practice, pp. 1–13

Posted: 3 Jan 2015 Last revised: 22 Mar 2019

See all articles by Meghna Dutta

Meghna Dutta

Indian Institute of Technology, Patna

Date Written: November 1, 2018

Abstract

Outsourcing as a form of production reorganisation has important implications for factor productivity. Empirical verification of this relationship for India, however, is unavailable in the recent times. To fill this gap, we measure the relationship between outsourcing and multifactor productivity for Indian firms between 2010 and 2014. We use fixed-effect panel data regression and GMM estimates to establish that outsourcing raises productivity significantly at the source. The outsourcing–productivity link has important policy implications for developing countries, such as India. Relative inflexibility of labour market institutions and slow-moving legal procedures may otherwise restrict the restructuring of firms under duress. Outsourcing-related productivity improvements might have helped to overcome such disadvantages even during the global crisis of 2008–2009.

Keywords: Productivity, outsourcing, organized sector, manufacturing industry, India

JEL Classification: D24, L6

Suggested Citation

Dutta, Meghna, Outsourcing and Productivity During Economic Crisis: Evidence from Indian Manufacturing Firms (November 1, 2018). Kar S., and Dutta, M. (2018), "Outsourcing and Productivity During Economic Crisis: Evidence from Indian Manufacturing Firms", Arthaniti-Journal of Economic Theory and Practice, pp. 1–13, Available at SSRN: https://ssrn.com/abstract=2542489

Meghna Dutta (Contact Author)

Indian Institute of Technology, Patna ( email )

Room 515, Block 6
IIT Patna, Bihta
Patna, Bihar 801103
India

HOME PAGE: http://www.iitp.ac.in

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
277
PlumX Metrics