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

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Global sourcing and technical efficiency–a firm-level study on the ICT industry in Sweden. / Andersson, Martin; Stone, Trudy Ann.

In: Journal of Business Economics and Management, Vol. 18, No. 5, 03.09.2017, p. 877-896.

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TY - JOUR

T1 - Global sourcing and technical efficiency–a firm-level study on the ICT industry in Sweden

AU - Andersson, Martin

AU - Stone, Trudy Ann

PY - 2017/9/3

Y1 - 2017/9/3

N2 - 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.

AB - 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.

KW - globalization

KW - imports

KW - learning

KW - offshoring

KW - outsourcing

KW - recombinant capabilities

KW - technical efficiency

KW - technology transfer

KW - variety

U2 - 10.3846/16111699.2017.1356367

DO - 10.3846/16111699.2017.1356367

M3 - Article

VL - 18

SP - 877

EP - 896

JO - Journal of Business Economics and Management

JF - Journal of Business Economics and Management

SN - 1611-1699

IS - 5

ER -