SERVICES OUTSOURCING AND INNOVATION: AN EMPIRICAL INVESTIGATION |
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| Authors: | HOLGER GÖRG AOIFE HANLEY |
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| Affiliation: | G?rg: Professor of International Economics, Kiel Institute for the World Economy and University of Kiel, Kiel, Germany. Phone +49 431 8814 258, Fax +49 431 880 1618, E‐mail holger.goerg@ifw‐kiel.de. He is also affiliated with GEP Nottingham and CEPR. |
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| Abstract: | We provide a comprehensive empirical analysis of the links between international services outsourcing, domestic outsourcing, profits, and innovation using plant‐level data. We find a positive effect of international outsourcing of services on innovative activity at the plant level. Such a positive effect can also be observed for domestic outsourcing, but the magnitude is smaller. We also find that international services outsourcing has a positive effect on profitability, as predicted by theory, whereas this is not true for domestic sourcing. The results are robust to various specifications and an instrumental variables analysis. (JEL F19, O31) |
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