Foreign outsourcing and firm-level characteristics: evidence from Japanese manufacturers

Eiichi Tomiura, Kobe University

Abstract

By using micro data of 118,300 firms without thresholds in all manufacturing industries in Japan, this paper investigates the foreign outsourcing, distinguished from domestic outsourcing, at the firm level. Less than three percent of the firms, which are substantially large-sized, are involved in foreign outsourcing. The high non-production wage is related positively with foreign outsourcing, but negatively with domestic outsourcing. The productivity, R&D intensity, and computer usage are significantly more strongly related with foreign outsourcing than domestic outsourcing. Thus, the outsourcing across national borders is concentrated among a limited numbers of large-sized firms with high management and technological capability.

Keywords: Foreign outsourcing; Wages; Skills; Firm-level data JEL classification: F1; F23; J31

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