Global sourcing and technical efficiency–a firm-level study on the ICT industry in Sweden

Martin Andersson, Trudy Ann Stone

Research output: Contribution to journalArticlepeer-review

14 Citations (SciVal)

Abstract

We analyse the relationship between international sourcing, measured as imports of intermediate inputs, and the technical efficiency of firms in the information and communications technologies (ICT) manufacturing industry in Sweden. Using stochastic frontier analysis, we provide evidence that global sourcing improves firms’ capabilities to combine and re-combine inputs in productive ways, thereby increasing technical efficiency. We find a robust relationship between technical efficiency and international outsourcing. First, we find that firms that are deeply integrated into global sourcing networks are closer to their own production frontier. Second, firms that are engaged in international sourcing are also closer to the industry efficiency frontier. These findings are consistent with the argument that international sourcing stimulates firms’ capabilities by enabling them to identify and adopt higher quality inputs or more efficient production and management practices. These findings also suggest that the variety and extent of firms’ global sourcing networks constitute an important source of differences in efficiency levels among firms the ICT manufacturing industry.

Original languageEnglish
Pages (from-to)877-896
Number of pages20
JournalJournal of Business Economics and Management
Volume18
Issue number5
DOIs
Publication statusPublished - 2017 Sep 3

Subject classification (UKÄ)

  • Business Administration

Keywords

  • globalization
  • imports
  • learning
  • offshoring
  • outsourcing
  • recombinant capabilities
  • technical efficiency
  • technology transfer
  • variety

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