Does offshoring pay? Firm-level evidence from Japan

Alexander Hijzen, Tomohiko Inui, Yasuyuki Todo

Research output: Contribution to journalArticle

48 Citations (Scopus)

Abstract

This article explores the impact of offshoring on productivity using firm-level data for the Japanese manufacturing industries during the period 1994-2000. We find that intrafirm offshoring, that is, sourcing of intermediate inputs to foreign affiliates within a particular multinational firm, has generally a positive effect on productivity of the offshoring firm, while arm's-length offshoring, that is, sourcing to unaffiliated foreign firms, does not have such an effect. In addition, the impact of arm's-length offshoring is negative for nonmultinationals and nonexporters but nonnegative for multinationals and exporters. These results suggest that the costs of searching foreign firms suitable for offshoring are nonnegligible. (JEL F14, L23).

Original languageEnglish
Pages (from-to)880-895
Number of pages16
JournalEconomic Inquiry
Volume48
Issue number4
DOIs
Publication statusPublished - 2010 Oct 1
Externally publishedYes

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Economics and Econometrics

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