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Managing export complexity: the role of service outsourcing

Berlingieri, Giuseppe and Pisch, Frank (2022) Managing export complexity: the role of service outsourcing. CEP Discussion Papers (1843). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

Exporting involves sunk and fixed costs in the form of service inputs, and whether such services are 'made' in-house or 'bought' from external agencies is a key organizational margin: it is not a core-competence of manufacturing companies and has far-reaching implications for the costs of exporting. We study such outsourcing decisions both conceptually and empirically. For guidance, we propose a theoretical framework in which firms trade off managerial strain (internal provision) and ex-post adaptation costs (external provision). Using confidential firm-level data from France and a novel instrumental variables strategy, we document the precise service inputs needed to access foreign markets and provide empirical evidence that these are typically outsourced. In line with the model, this pattern is strong for services with high costs of adaptation, and when firms have little managerial capability available. Finally, we discuss the implications of our findings for servitization and inequality.

Item Type: Monograph (Discussion Paper)
Official URL: https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information: © 2022 The Authors
Divisions: Centre for Economic Performance
Subjects: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HB Economic Theory
JEL classification: D - Microeconomics > D2 - Production and Organizations > D23 - Organizational Behavior; Transaction Costs; Property Rights
F - International Economics > F1 - Trade > F10 - General
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L22 - Firm Organization and Market Structure: Markets vs. Hierarchies; Vertical Integration; Conglomerates; Subsidiaries
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L23 - Organization of Production
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L24 - Contracting Out; Joint Ventures; Technology Licensing
L - Industrial Organization > L8 - Industry Studies: Services > L84 - Personal, Professional, and Business Services
Date Deposited: 10 Jan 2023 11:57
Last Modified: 14 Sep 2024 04:20
URI: http://eprints.lse.ac.uk/id/eprint/117832

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