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

16 Pages Posted: 31 Oct 2004

See all articles by Sourafel Girma

Sourafel Girma

Nottingham University Business School

Holger Görg

University of Kiel; Kiel Institute for the World Economy


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

Suggested Citation

Girma, Sourafel and Gorg, Holger, Outsourcing, Foreign Ownership, and Productivity: Evidence from UK Establishment-Level Data. Review of International Economics, Vol. 12, No. 5, pp. 817-832, November 2004. Available at SSRN: https://ssrn.com/abstract=608506

Sourafel Girma (Contact Author)

Nottingham University Business School ( email )

Jubilee Campus
Nottingham, NG8 1BB
United Kingdom
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HOME PAGE: http://www.nottingham.ac.uk/~lizsmg/

Holger Gorg

University of Kiel ( email )

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D-24118 Kiel, Schleswig-Holstein 24118

Kiel Institute for the World Economy ( email )

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

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