The authors are grateful to the ONS Business Data Linking Project for providing access to the ARD database. Thanks are also due to two anonymous referees, Eric Strobl, and participants at the GEP conference on “Adjusting to Globalisation,” in particular Steve Redding, for helpful comments; and to Richard Upward for providing data from the New Earnings Survey. All remaining errors or omissions are, of course, the authors’. Financial support from the Leverhulme Trust (grant F114/BF) is gratefully acknowledged.
Outsourcing, Foreign Ownership, and Productivity: Evidence from UK Establishment-level Data
Version of Record online: 20 OCT 2004
Review of International Economics
Volume 12, Issue 5, pages 817–832, November 2004
How to Cite
Girma, S. and Görg, H. (2004), Outsourcing, Foreign Ownership, and Productivity: Evidence from UK Establishment-level Data. Review of International Economics, 12: 817–832. doi: 10.1111/j.1467-9396.2004.00483.x
- Issue online: 20 OCT 2004
- Version of Record online: 20 OCT 2004
The paper presents an empirical analysis of “outsourcing” using establishment-level data for UK manufacturing industries. The authors analyze an establishment's decision to outsource and the subsequent effects of outsourcing on the establishment's productivity. Outsourcing is compared in domestic with foreign-owned establishments. The empirical results suggest that high wages are positively related to outsourcing, suggesting that the cost-saving motive is important. Foreign-owned firms have higher levels of outsourcing than domestic establishments. In the productivity analysis, an establishment's outsourcing intensity is positively related to its labor productivity and total factor productivity growth, and this effect is more pronounced for foreign establishments.