Kiel Working Papers, Kiel Institute for World Economics
No 1774:
What happened to Foreign Outsourcing when Firms went Online?
Ingrid Ott Aoife Hanley
Abstract: The possibility to outsource over the internet should
revolutionize foreign outsourcing, especially for services (UNCTAD, 2004).
Our model describes materials and services input allocation from domestic
vs. foreign suppliers. Allocations change when firms outsource online due
to access and competition effects. Using data for 99 firms who started
outsourcing online in 2003 together with a control group (never outsourcing
online) of over 682 Irish firms, we apply OLS and Propensity Score Matching
with Difference-in-Differences to find that 42-48 percent of foreign
services inputs growth arises from online outsourcing
Keywords: International Outsourcing, Propensity Score Matching, Input Price Uncertainty, Input Demand; (follow links to similar papers)
JEL-Codes: L23; (follow links to similar papers)
29 pages, June 2012
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