Outsourcing, Foreign Ownership and Productivity: Evidence from UK Establishment Level Data

GEP Working Paper No. 2002/16

27 Pages Posted: 11 Sep 2003

See all articles by Holger Görg

Holger Görg

University of Kiel; Kiel Institute for the World Economy

Sourafel Girma

Nottingham University Business School

Date Written: September 2002

Abstract

This paper presents an empirical analysis of "outsourcing" using establishment level data for UK manufacturing industries. We analyse an establishment's decision to outsource and the subsequent effects of outsourcing on the establishment's productivity. We compare outsourcing in domestic with foreign-owned establishments. Our empirical results suggest that high wages are positively related to outsourcing, suggesting that the cost saving motive is important. We also find that foreign-owned firms have higher levels of outsourcing than domestic establishments. In the productivity analysis we find that an establishment's outsourcing intensity is positively related to its labour productivity and total factor productivity growth and that this effect is more pronounced for foreign establishments.

Keywords: outsourcing, foreign direct investment, productivity

JEL Classification: F23, L23

Suggested Citation

Gorg, Holger and Girma, Sourafel, Outsourcing, Foreign Ownership and Productivity: Evidence from UK Establishment Level Data (September 2002). GEP Working Paper No. 2002/16. Available at SSRN: https://ssrn.com/abstract=410731 or http://dx.doi.org/10.2139/ssrn.410731

Holger Gorg (Contact Author)

University of Kiel ( email )

Olshausenstr. 40
D-24118 Kiel, Schleswig-Holstein 24118
Germany

Kiel Institute for the World Economy ( email )

P.O. Box 4309
Kiel, Schleswig-Hosltein D-24100
Germany

Sourafel Girma

Nottingham University Business School ( email )

Jubilee Campus
Nottingham, NG8 1BB
United Kingdom
+44 0 115 8466656 (Phone)

HOME PAGE: http://www.nottingham.ac.uk/~lizsmg/

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