Journal article
An Empirical Analysis of Motives for Offshore Outsourcing by U.S. Firms
The International trade journal, Vol.24(3), pp.298-320
07/19/2010
Handle:
https://hdl.handle.net/2376/116076
Abstract
In light of the political debate on offshore outsourcing, this article examines firm financial characteristics associated with the probability of being identified as an outsourcer. In a sample of S&P 500 firms, we find that firms identified as outsourcers operate in more competitive industries and have relatively worse operating performance, higher administrative overhead, and higher labor overhead. These firm characteristics are consistent with cost-cutting objectives and the need to respond to competitive pressures. We find that the need to lower labor costs is a significant determinant of manufacturing firms locating operations overseas, while lowering administrative overhead influences service firms' outsourcing decisions. From a policy perspective, our results suggest that the political pressure to limit firms' ability to offshore outsource will likely reduce their flexibility to respond to operating and competitive challenges.
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Details
- Title
- An Empirical Analysis of Motives for Offshore Outsourcing by U.S. Firms
- Creators
- Donna L Paul - Department of Finance , Washington State UniversityRossitza B Wooster - Department of Economics , Portland State University
- Publication Details
- The International trade journal, Vol.24(3), pp.298-320
- Academic Unit
- Finance and Management Science, Department of
- Publisher
- Taylor & Francis Group
- Identifiers
- 99900547953601842
- Language
- English
- Resource Type
- Journal article