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

Research output: Contribution to journalArticle

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.

Details

Authors
Organisations
External organisations
  • Blekinge Institute of Technology
  • Lund University
Research areas and keywords

Subject classification (UKÄ) – MANDATORY

  • Business Administration

Keywords

  • globalization, imports, learning, offshoring, outsourcing, recombinant capabilities, technical efficiency, technology transfer, variety
Original languageEnglish
Pages (from-to)877-896
Number of pages20
JournalJournal of Business Economics and Management
Volume18
Issue number5
Publication statusPublished - 2017 Sep 3
Publication categoryResearch
Peer-reviewedYes