Adaptation and the Boundary of Multinational Firms

Costinot, Arnaud; Oldenski, Lindsay; Rauch, James E.

doi:10.1162/rest_a_00072

Cited by 111 publications

(48 citation statements)

References 29 publications

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“…Transaction cost theory, starting from Williamson (1971), predicts that ownership prevents costly haggling over appropriable quasi-rents. Second, these products are more complex, which increases the risk of costly ex post renegotiation (see, for instance, Costinot et al, 2011). Third, these products typically embody costly R&D efforts, which are better protected against imitation within firm boundaries, as emphasized by the intangible asset theories.…”

Section: Country and Product Determinantsmentioning

confidence: 99%

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The Determinants of Intrafirm Trade: Evidence from French Firms

et al. 2012

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Abstract-How well does the theory of the firm explain the choice between intrafirm and arm's-length trade? This paper uses firm-level import data from France to look into this question. We find support for three key predictions of property rights theories of the multinational firm. Intrafirm imports are more likely in capital-and skill-intensive firms, in highly productive firms, and from countries with well-functioning judicial institutions. We bridge previous aggregate findings with our investigation by decomposing intrafirm imports into an extensive and intensive margin and uncover interesting patterns in the data that require further theoretical investigation.

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Section: Country and Product Determinantsmentioning

confidence: 99%

“…This rapidly expanding theoretical literature has triggered a series of empirical investigations on U.S. intrafirm trade (Antràs, 2003b;Yeaple, 2006;Nunn & Trefler 2008;Bernard et al, 2010;Costinot, Oldenski, & Rauch, 2011). Most of these studies find support for the property rights approach taken by Antràs (2003b) and Antràs andHelpman (2004, 2008).…”

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confidence: 99%

The Determinants of Intrafirm Trade: Evidence from French Firms

et al. 2012

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“…This data structure is common to almost any data on tasks used in academic research. Examples for data sets on task content without a (short-run) time variation are the German BIBB data used here and in Becker et al (2013), or the O*NET data base for the US (see Crinò 2010, Costinot et al 2011, which are widely used in the literature -also on a number of topics beyond international economics. Using such data demands an approach which is consistent with this data structure, such as the one presented here.…”

Section: Introductionmentioning

confidence: 99%

Offshoring and Relative Labor Demand from a Task Perspective

Hogrefe

2013

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Non-technical summarySince trade is becoming more of a task-related phenomenon due to the increase in offshoring activities by firms, the pattern of effects across workers is changing as well. In particular, the skill-based characterization of differentially affected groups falls short of comprehensively capturing the effects. Offshoring occurs based on relocation cost for single occupations, which do not necessarily reflect skill intensities. This paper puts this claim to a test by analyzing industry level relative labor demand from a task perspective. First, a model is developed to describe the mechanisms underlying the link between offshoring and shifts in employment and cost shares of tasks. This model explicitly treats occupations as fixed bundles of tasks which are, as a whole, subject to the offshoring decision. This is a crucial difference to skill-based approaches, in which individuals either supply high-skilled or low-skilled labor, with complete mobility across industries or stages of production. Furthermore, the model highlights the between-occupation dimension in task share changes in the economy. The model introduces a sorting mechanism of individuals across occupations, which relies on a trade off between occupations specific wages and individual abilities in terms of effort needed for the execution of certain tasks. In such a setting, an overall fall in offshoring costs can shift the cut-off occupation, which separates home from foreign production, such that the range of occupations at home shrinks. Crucially, this remaining range of occupations is characterized by a higher non-routine and interactive task content. Since workers whose jobs have gone offshore optimally re-sort into these occupations, average employment shares and cost shares of routine and non-interactive tasks fall in the home economy.Introducing occupations as bundles of tasks provides a new and consistent way of theoretically sound estimation of relative labor demand for tasks. Second, the theoretical predictions are tested with industry level data from German manufacturing. A clear and robust result emerges. An increase in offshoring significantly reduces home country relative demand for routine and non-interactive tasks -in particular if this offshoring is directed towards non-OECD countries. This result is robust to various alterations and the use of instrumental variable methods. The additional value compared to skill related measures is demonstrated by the fact that this d...

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“…Możliwości zagranicznego zlecania produkcji wprowadzają do rozważań problem transferu kompetencji. Jednak, jak zauważyli Costinot, Oldensky i Rauch [Oldensky, Rauch, 2009], firmy mają tendencję do zlecania na zewnątrz zadań typowych, w przypadku których łatwo jest kontrolować i egzekwować ich wykonanie. Mimo to, duże firmy preferują, aby wszelkie nowe i nietypowe zadania, zatem zarazem te związane z wykorzystaniem nowej kompetencji, były zinternalizowane.…”

Section: Rysunek 1 Zależności Między Krajami a Produkowanymi Przez Nunclassified