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

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  • Martin Andersson
  • Trudy-Ann Stone

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.

Suggested Citation

  • Martin Andersson & Trudy-Ann Stone, 2017. "Global sourcing and technical efficiency – a firm-level study on the ICT industry in Sweden," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 18(5), pages 877-896, September.
    • Handle: RePEc:taf:jbemgt:v:18:y:2017:i:5:p:877-896
    DOI: 10.3846/16111699.2017.1356367
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    Cited by:

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    2. Castellani, Davide & Fassio, Claudio, 2019. "From new imported inputs to new exported products. Firm-level evidence from Sweden," Research Policy, Elsevier, vol. 48(1), pages 322-338.
    3. Huwei Wen & Weitao Liang & Chien-Chiang Lee, 2024. "Input–output Efficiency of China’s Digital Economy: Statistical Measures, Regional Differences, and Dynamic Evolution," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(3), pages 10898-10923, September.
    4. Mariachiara Barzotto & Lisa De Propris, 2021. "The value of firm linkages in the age of industry 4.0: a qualitative comparative analysis," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 67(2), pages 245-272, October.
    5. Castellani, Davide & Fassio, Claudio, 2017. "Export innovation: The role of new imported inputs and multinationality," Papers in Innovation Studies 2017/16, Lund University, CIRCLE - Centre for Innovation Research.

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