ITEM METADATA RECORD
Title: Outsourcing when investments are specific and complementary
Authors: Lileeva, Alla
Van Biesebroeck, Jo
Issue Date: 2007
Publisher: University of Toronto, Department of Economics
Series Title: Working paper 287 pages:1-45
Abstract: Using the universe of large Canadian manufacturing firms in 1988 and 1996, we investigate to what extent firms’ outsourcing decision can be explained by a simple property rights model. A novel aspect of the data is the availability of component level information on outputs as well as inputs which permits the construction of a very detailed measure of vertical integration. Moreover, we construct five different measures of technological intensity to proxy for investments that are likely to be specific to a buyer-seller relationship. Our main findings are that (i) greater specificity makes outsourcing less likely; (ii) complementarities between the investments of the buyer and the seller are also associated with less outsourcing; (iii) only when we focus on the range of transactions with low complementarities do we find support for several nuanced predictions of the property rights model.
Publication status: published
KU Leuven publication type: ER
Appears in Collections:Research Center of Econometrics, Leuven
Department of Economics, Leuven - miscellaneous

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