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Article: Information, incentives and multinational firms
Title | Information, incentives and multinational firms |
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Authors | |
Keywords | MNEs Outsourcing Organization of production FDI |
Issue Date | 2011 |
Publisher | Elsevier. The Journal's web site is located at http://www.sciencedirect.com/science/journal/00221996 |
Citation | Journal of International Economics, 2011, v. 85, n. 1, p. 147-158 How to Cite? |
Abstract | I present a model that explains a multinational firm's choice of organizational form. If a firm in the developed country outsources the production of its intermediate goods to a supplier in the developing country, it faces an adverse selection problem. If it chooses to produce the intermediate goods in its own subsidiary in the developing country, it faces an inefficient monitoring problem. My analysis of this tradeoff provides a new explanation for the observation that FDI is concentrated in capital intensive industries and yields two empirical hypotheses: more firms should adopt outsourcing instead of FDI after trade liberalization; the share of intra-firm trade in total trade should be increasing in the degree of productivity dispersion across intermediate goods suppliers in the developing country. © 2011 Elsevier B.V. |
Persistent Identifier | http://hdl.handle.net/10722/202197 |
ISSN | 2023 Impact Factor: 3.8 2023 SCImago Journal Rankings: 4.583 |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Chen, Cheng | - |
dc.date.accessioned | 2014-08-22T02:57:47Z | - |
dc.date.available | 2014-08-22T02:57:47Z | - |
dc.date.issued | 2011 | - |
dc.identifier.citation | Journal of International Economics, 2011, v. 85, n. 1, p. 147-158 | - |
dc.identifier.issn | 0022-1996 | - |
dc.identifier.uri | http://hdl.handle.net/10722/202197 | - |
dc.description.abstract | I present a model that explains a multinational firm's choice of organizational form. If a firm in the developed country outsources the production of its intermediate goods to a supplier in the developing country, it faces an adverse selection problem. If it chooses to produce the intermediate goods in its own subsidiary in the developing country, it faces an inefficient monitoring problem. My analysis of this tradeoff provides a new explanation for the observation that FDI is concentrated in capital intensive industries and yields two empirical hypotheses: more firms should adopt outsourcing instead of FDI after trade liberalization; the share of intra-firm trade in total trade should be increasing in the degree of productivity dispersion across intermediate goods suppliers in the developing country. © 2011 Elsevier B.V. | - |
dc.language | eng | - |
dc.publisher | Elsevier. The Journal's web site is located at http://www.sciencedirect.com/science/journal/00221996 | - |
dc.relation.ispartof | Journal of International Economics | - |
dc.rights | This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License. | - |
dc.rights | NOTICE: this is the author’s version of a work that was accepted for publication in Journal of International Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in PUBLICATION, [VOL 85, ISSUE 1, (2011)] DOI 10.1016/j.jinteco.2011.05.005 | - |
dc.subject | MNEs | - |
dc.subject | Outsourcing | - |
dc.subject | Organization of production | - |
dc.subject | FDI | - |
dc.title | Information, incentives and multinational firms | - |
dc.type | Article | - |
dc.description.nature | preprint | - |
dc.identifier.doi | 10.1016/j.jinteco.2011.05.005 | - |
dc.identifier.scopus | eid_2-s2.0-80052264604 | - |
dc.identifier.volume | 85 | - |
dc.identifier.issue | 1 | - |
dc.identifier.spage | 147 | - |
dc.identifier.epage | 158 | - |
dc.identifier.isi | WOS:000295441400012 | - |
dc.identifier.issnl | 0022-1996 | - |