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Outsourcing and Firm-level Performance

Author

Listed:
  • Bernd Görzig
  • Andreas Stephan

Abstract

Using firm-level panel data from the German cost structure survey over the period 1992 to 2000, our empirical analysis shows that firms that increased material inputs relative to internal labor costs performed better in terms of gross operating surplus than other firms. However, firms that increased external services relative to internal labor costs, thus outsourcing service functions previously provided within the firm, performed worse. In sum, our findings support the view that firms tend to overestimate the benefits accruing from outsourcing of services previously provided internally.

Suggested Citation

  • Bernd Görzig & Andreas Stephan, 2002. "Outsourcing and Firm-level Performance," Discussion Papers of DIW Berlin 309, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp309
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    References listed on IDEAS

    as
    1. Brenner, Steffen & Bunke, Olaf & Droge, Bernd & Schwalbach, Joachim, 2001. "The relative importance of group-level effects on the performance of German companies," SFB 373 Discussion Papers 2001,95, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    2. Fixler, Dennis J. & Siegel, Donald, 1999. "Outsourcing and productivity growth in services," Structural Change and Economic Dynamics, Elsevier, vol. 10(2), pages 177-194, June.
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    6. Almas Heshmati, 2003. "Productivity Growth, Efficiency and Outsourcing in Manufacturing and Service Industries," Journal of Economic Surveys, Wiley Blackwell, vol. 17(1), pages 79-112, February.
    7. Elizabeth Webster, 1999. "The Economics of Intangible Investment," Books, Edward Elgar Publishing, number 1530.
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    More about this item

    Keywords

    Outsourcing; Firm Performance; Business Service Sector.;
    All these keywords.

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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