Plausible deniability: Integration vs. outsourcing with heterogeneous firms and unethical suppliers

Arbeitspapier

This paper presents a property rights model of the international organization of production, where heterogeneous headquarter firms source from suppliers in the Global South. Due to weak regulatory stringency in the Global South, suppliers can employ a cost-saving technology. Consumers, however, consider this technology as unethical and may therefore participate in a consumer boycott, if they consider a firm to be responsible for its supplier's conduct. The paper analyzes how the international organization of production and the choice of technology interact with each other as well as sectoral characteristics. It identifies three mechanisms that govern whether integration is preferred by high-productivity firms in a given sector: the Antràs mechanism (severity of underinvestment by headquarter vs. supplier), the unethical mechanism (cost savings vs. boycott risk) and the deniability mechanism (higher boycott risk under integration than under outsourcing). The equilibrium share of active firms who integrate in a sector increases with productivity dispersion and decreases in the sector's cost advantage of unethical production.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Passauer Diskussionspapiere - Volkswirtschaftliche Reihe ; No. V-88-22

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Organizational Behavior; Transaction Costs; Property Rights ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Multinational Firms; International Business ; Economic Impacts of Globalization: Microeconomic Impacts ; Production, Pricing, and Market Structure; Size Distribution of Firms ; Organization of Production ; Nonprofit Institutions; NGOs; Social Entrepreneurship ; Social Innovation
• Thema: international outsourcing ; property rights theory ; heterogeneousfirms ; ethical production ; consumer boycotts ; NGOs ; social activism

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Löhnert, Claudius
• Ereignis: Veröffentlichung
• (wer): Universität Passau, Wirtschaftswissenschaftliche Fakultät
• (wo): Passau
• (wann): 2022

Weitere Informationen

• Handle: http://hdl.handle.net/10419/251768
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ