Market Thickness, Sunk Entry Costs, Firm Heterogeneity and the Outsourcing Decision: Empirical Evidence of Manufacturing Firms in France

In this paper I investigate, empirically, the outsourcing strategy by firms in French manufacturing industries. I particularly focus on the effect of the market thickness and of firm heterogeneity on the outsourcing strategy. For this purpose, I estimate a dynamic probit model where I link the decision to outsource to previous outsourcing behaviour. I am able to estimate the sunk entry costs incurred by the firms when adopting an outsourcing strategy. The results show that outsourcing is a persistent strategy adopted by more productive firms and larger ones. They also show that market thickness reduces search costs and enhances the establishment of outsourcing relationships.Outsourcing, Firm Heterogeneity, Dynamic Binary Choice Models, Market Thickness

Drivers of the Offshore Outsourcing of R&D: Empirical Evidence from French Manufacturers

The pace of technological change and the challenges faced by companies to remain competitive in global markets have contributed to a global expansion of R&D transactions. This paper shows that French companies engaged in the offshore outsourcing of R&D are outward oriented essentially through exports. Further, single unit companies seem more active in this type of R&D transaction than companies belonging to a group. These findings suggest a stronger integration of small and medium size exporting companies into international networks of innovation. Technological sourcing seems to be leading this phenomenon more than cost-opportunities motivations.R&D Outsourcing, Offshore of Research and Development Activities, Globalization.

Technology transfer through vertical linkages: The case of the Spanish manufacturing industry

Whether or not foreign direct investment helps to upgrade the technological capacities of firms in host countries is an important question for policy makers. Even more important is the question of what are the most effective channels of technology transfer. The econometric analysis presented here is based on a firm level database from Spain for the period 1990-2000. We associate spillovers with the effect of horizontal and vertical FDI on total factor productivity of local firms. We find that technology spillovers are limited to the case of vertical linkages. However these spillovers are affected by the technology gap between domestic firms and foreign affiliates as well as by the characteristics of foreign affiliates. Linkages with exportoriented affiliates and fully owned ones seem to have a better influence on the productivity of domestic firms.technology spillovers, vertical linkages, foreign direct investment

“Slicing the Value Chain” Internationally: Empirical Evidence on the Offshoring Strategy by French Firms

This paper analyzes the offshoring strategy from an empirical view. It focuses on a set of models, extracts a set of testable hypothesises and creates a suitable set of variable to test their validity. This analysis is based on a data set from French manufacturing firms that provides detailed information on the offshoring strategy. The choice of offshoring modes is investigated through the estimation of a multinomial logit model and associated to a set of explanatory variables at the firm, industry and country levels. Our results emphasize the role of firm heterogeneity, input specificity and of market thickness.Offshoring, Vertical FDI, Outsourcing, Firm Heterogeneity

Exports and Productivity: Comparable Evidence for 14 Countries

We use comparable micro level panel data for 14 countries and a set of identically specified empirical models to investigate the relationship between exports and productivity. Our overall results are in line with the big picture that is by now familiar from the literature: Exporters are more productive than non-exporters when observed and unobserved heterogeneity are controlled for, and these exporter productivity premia tend to increase with the share of exports in total sales; there is strong evidence in favour of self-selection of more productive firms into export markets, but nearly no evidence in favour of the learning-by-exporting hypothesis. We document that the exporter premia differ considerably across countries in identically specified empirical models. In a meta-analysis of our results we find that countries that are more open and have more effective government report higher productivity premia. However, the level of development per se does not appear to be an explanation for the observed cross-country differences.Exports, productivity, micro data, international comparison

The Outsourcing of Research and Development in Global Markets: Evidence from France

A newsletter of The Belden Center for Private Enterprise Education, Harding University School of Business, Searcy, Arkansas

The role of firms in the economic assimilation of refugees

Objectives To investigate the extent to which firm sorting effects influence the refugee-native earning gap in the Netherlands, and to examine the role of pay-setting effects in widening or narrowing the gap. Method Using Dutch wage and refugee registration data from 2014 to 2021, we employ a two-way effects model, also called the AKM model, and the Blinder-Oxaca decompose model, in order to decompose the refugee-native pay gap into firm sorting and pay-setting effects. Results Our findings indicate that refugees in the Netherlands earn only a third of the average earnings of native workers and that 17% of the pay gap can be explained by firm sorting effects. Pay-setting effects are found to be negative, indicating that the pay-setting channel works to reduce pay gaps between natives and refugees. Limited access to higher-paying firms may lead to a mismatch between refugees' abilities and earnings, exacerbating the adverse impact of firm sorting. Conclusion To promote refugee economic assimilation, higher-paying firms should provide accessible job opportunities based on fair assessments of refugees' skills. Our analysis underscores the importance of understanding and addressing the role of firm sorting in widening refugee-native pay gaps, and highlights the potential of pay-setting effects to reduce such gaps