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The Dynamics of Offshoring and Institutions

Heyman, Fredrik LU and Tingvall, Patrik Gustavsson (2015) In The Be Journal of Economic Analysis & Policy 15(4). p.1975-2016
Abstract
Previous research has found that weak institutions can hamper investment and alter patterns of trade. However, little is known about the impact of institutional quality on offshoring. This lack of knowledge is surprising, given that offshoring has become an important part of many firms' internationalization strategies. This study uses detailed firm-level data for the 1997-2005 period to examine the relationship between institutional quality in 113 source countries and offshoring by Swedish firms. The results suggest that weak institutions are negatively related to offshoring in general and to the offshoring of R&D- and relationship specificity-intensive inputs in particular. An analysis of learning effects suggests that the impact of... (More)
Previous research has found that weak institutions can hamper investment and alter patterns of trade. However, little is known about the impact of institutional quality on offshoring. This lack of knowledge is surprising, given that offshoring has become an important part of many firms' internationalization strategies. This study uses detailed firm-level data for the 1997-2005 period to examine the relationship between institutional quality in 113 source countries and offshoring by Swedish firms. The results suggest that weak institutions are negatively related to offshoring in general and to the offshoring of R&D- and relationship specificity-intensive inputs in particular. An analysis of learning effects suggests that the impact of weak institutions on the offshoring of relationship specificity-intensive inputs vanishes when firms return to countries from which they have previous market experience. Our results are robust to the use of various measures of institutional quality. (Less)
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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
offshoring, institutions, firm-level data
in
The Be Journal of Economic Analysis & Policy
volume
15
issue
4
pages
1975 - 2016
publisher
De Gruyter
external identifiers
  • wos:000368087600016
  • scopus:84943768230
ISSN
1935-1682
DOI
10.1515/bejeap-2014-0073
language
English
LU publication?
yes
id
0b5ae68c-672c-49e6-95da-0c40b4d2a176 (old id 8754522)
date added to LUP
2016-02-23 08:09:00
date last changed
2017-01-01 06:15:11
@article{0b5ae68c-672c-49e6-95da-0c40b4d2a176,
  abstract     = {Previous research has found that weak institutions can hamper investment and alter patterns of trade. However, little is known about the impact of institutional quality on offshoring. This lack of knowledge is surprising, given that offshoring has become an important part of many firms' internationalization strategies. This study uses detailed firm-level data for the 1997-2005 period to examine the relationship between institutional quality in 113 source countries and offshoring by Swedish firms. The results suggest that weak institutions are negatively related to offshoring in general and to the offshoring of R&D- and relationship specificity-intensive inputs in particular. An analysis of learning effects suggests that the impact of weak institutions on the offshoring of relationship specificity-intensive inputs vanishes when firms return to countries from which they have previous market experience. Our results are robust to the use of various measures of institutional quality.},
  author       = {Heyman, Fredrik and Tingvall, Patrik Gustavsson},
  issn         = {1935-1682},
  keyword      = {offshoring,institutions,firm-level data},
  language     = {eng},
  number       = {4},
  pages        = {1975--2016},
  publisher    = {De Gruyter},
  series       = {The Be Journal of Economic Analysis & Policy},
  title        = {The Dynamics of Offshoring and Institutions},
  url          = {http://dx.doi.org/10.1515/bejeap-2014-0073},
  volume       = {15},
  year         = {2015},
}