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The external effects of offshoring on job security in SMEs

El-Sahli, Zouheir LU ; Gullstrand, Joakim LU and Olofsdotter, Karin LU (2022) In Small Business Economics 59(4). p.1613-1640
Abstract

We investigate the effects of offshoring on job security using matched employer-employee data from Sweden. Between 1997 and 2011, the share of offshoring firms fell from around 25 to 22% while offshoring per worker within offshoring firms almost doubled. We use this variation to contribute to the literature by examining the effects of the neighboring firms’ offshoring (external offshoring) on job separation in small and medium-sized enterprises (SMEs). Our results suggest that external offshoring has a significant impact on job security in SMEs that do not offshore themselves. In addition, having a university degree, being young, and being new to the job reduce the risk of a job exit due to increased external offshoring. This result is... (More)

We investigate the effects of offshoring on job security using matched employer-employee data from Sweden. Between 1997 and 2011, the share of offshoring firms fell from around 25 to 22% while offshoring per worker within offshoring firms almost doubled. We use this variation to contribute to the literature by examining the effects of the neighboring firms’ offshoring (external offshoring) on job separation in small and medium-sized enterprises (SMEs). Our results suggest that external offshoring has a significant impact on job security in SMEs that do not offshore themselves. In addition, having a university degree, being young, and being new to the job reduce the risk of a job exit due to increased external offshoring. This result is indicative of a Schumpeterian job-restructuring effect where old jobs are replaced by newer ones. Finally, the increased risk of a job exit in SMEs suggests a higher vulnerability of these firms to local shocks due to offshoring activities in larger neighboring firms.

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author
; and
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Globalization, Heterogeneous firms, Job security, Offshoring, Small and medium-sized enterprises, Swedish manufacturing
in
Small Business Economics
volume
59
issue
4
pages
1613 - 1640
publisher
Springer
external identifiers
  • scopus:85122486959
ISSN
0921-898X
DOI
10.1007/s11187-021-00578-2
language
English
LU publication?
yes
id
29d8140e-4d52-4da6-acad-6101b898e171
date added to LUP
2022-02-08 14:37:19
date last changed
2023-01-16 10:17:31
@article{29d8140e-4d52-4da6-acad-6101b898e171,
  abstract     = {{<p>We investigate the effects of offshoring on job security using matched employer-employee data from Sweden. Between 1997 and 2011, the share of offshoring firms fell from around 25 to 22% while offshoring per worker within offshoring firms almost doubled. We use this variation to contribute to the literature by examining the effects of the neighboring firms’ offshoring (external offshoring) on job separation in small and medium-sized enterprises (SMEs). Our results suggest that external offshoring has a significant impact on job security in SMEs that do not offshore themselves. In addition, having a university degree, being young, and being new to the job reduce the risk of a job exit due to increased external offshoring. This result is indicative of a Schumpeterian job-restructuring effect where old jobs are replaced by newer ones. Finally, the increased risk of a job exit in SMEs suggests a higher vulnerability of these firms to local shocks due to offshoring activities in larger neighboring firms.</p>}},
  author       = {{El-Sahli, Zouheir and Gullstrand, Joakim and Olofsdotter, Karin}},
  issn         = {{0921-898X}},
  keywords     = {{Globalization; Heterogeneous firms; Job security; Offshoring; Small and medium-sized enterprises; Swedish manufacturing}},
  language     = {{eng}},
  number       = {{4}},
  pages        = {{1613--1640}},
  publisher    = {{Springer}},
  series       = {{Small Business Economics}},
  title        = {{The external effects of offshoring on job security in SMEs}},
  url          = {{http://dx.doi.org/10.1007/s11187-021-00578-2}},
  doi          = {{10.1007/s11187-021-00578-2}},
  volume       = {{59}},
  year         = {{2022}},
}