Global sourcing of complex production processes

Arbeitspapier

We develop a theory of a firm in an incomplete contracts environment which decides on its complexity, organization, and global scale. Specifically, the firm decides i) how thinly it wants to slice its production process by choosing the mass of symmetric intermediate inputs that are simultaneously combined to a final product, ii) if the supplier of each component is an external contractor or an integrated affiliate, and iii) if that component is offshored to a foreign country. We also consider the case of asymmetric inputs. Our model leads to a rich set of novel predictions about the structure of multinational firms that are consistent with stylized facts from the recent empirical literature.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 3559

Classification and Topics

• Classification: Wirtschaft ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Organizational Behavior; Transaction Costs; Property Rights ; Organization of Production
• Subject: multinational firms ; outsourcing ; intra-firm trade ; offshoring ; vertical FDI ; Multinationales Unternehmen ; Theorie der Unternehmung ; Produktionsorganisation ; Outsourcing ; Firmeninterner Handel ; Offshoring ; Direktinvestition ; Lieferanten-Kunden-Beziehung ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Schwarz, Christian ; Suedekum, Jens
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/49521
• Last update: 10.03.2025, 11:43 AM CET