Do Information and Communication Technology Access and Innovation Increase Outsourcing in Small and Medium Enterprises?

María Verónica Alderete

Abstract


In this paper we present an econometric model to determine whether an SME (Small and Medium Sized Enterprise)’s probability of outsourcing depends on their levels of innovation and information and communication technology use. The predictions of the econometric model are tested by means of a LOGIT model using a cross section sample of an Argentinean SME for the year 2006. The model predicts that the level of innovation of an SME will significantly influence its probability of outsourcing. Besides, it stresses the negative incidence of the information and communication technologies (ICT) access on the outsourcing decision.

Keywords


outsourcing; small and medium sized enterprises; innovation; information and communication technologies; and transaction costs.

Full Text:

PDF

References


Abraham, K. G. and Taylor, S. K. (1996). Firms' Use of Outside Contractors: Theory and Evidence. Journal of Labor Economics, Vol. 14, No. 3, pp. 394-424

Abramovsky and Griffith(2006).Outsourcing and Offshoring of business services. How important is ICT? Journal of the European Economic Association, vol.4, N°2-3, pp 594-601.

Barney, J. (1991) “Firm resources and sustained competitive advantage.” Journal of Management, vol. 17, N°1, pp 99–120.

Bartel, A; Lach, S and Sicherman, N. (2009). Outsourcing and Technological Change. IZA (The Institute for the Study of Labor, Germany ) Discussion Paper No. 4678.

Bartel, A; Lach, S and Sicherman, N. (2008). Brief synapses of The impact of technological innovation on outsourcing decisions. MIT Sloan Management Review, Cambridge.

Bartel, A; Lach, S and Sicherman, N. (2008). Outsourcing and technological innovations: A firm-level analysis. Working paper N°057.RIVAFE2 (Regional Comparative Advantage and Knowledge Based Entrepreneurship).

Bakhtiari, S. (2011). Efficiency and Outsourcing: Evidence from Australian Manufacturing. UNSW Australian School of Business Research Paper No. 2012-07

Bemfratello, L; Razzolini, T. and Sembenelli, A. (2009). Does ICT investment spur or hamper offshoring? Empirical evidence from microdata. Department of Economics and Public finance G Prato, Universita Degli Studi Di Torino. Working paper Na5. June 2009.

Cachon, G.P., Harker, P.T., 2002. Competition and outsourcing with scale economies. Management Science 48 (10), 1314–1333.

Clemons, E.K., Reddi, S.P.; Row, M. (1993). “The Impact of Information Technology on the Organization of Economic Activity: The “Move to the Middle” Hypothesis”. Journal of Management Information Systems, December 1993.

Coase, R. (1937). The nature of the firm. Económica, vol. 4, N°16, pp. 386-405.

Ding, Hung-bin (2001) “Network and innovation: the impact of initial innovation conditions on interfirm network formation.” Change Management and the New Industrial Revolution. Proceeding from the International Engineering Management Conference (IEMC), pp. 348 – 353.

Diaz-Mora, C. (2005). “Determinants of outsourcing production: A dynamic panel data approach for manufacturing industries”. Documentos de Economía y finanzas internacionales 05/07. http://www.fedea.es/hojas/publicaciones.html

Díaz Mora, C. y Gangoy Juste, R. (2008). Outsourcing en las industrias tradicionales: determinantes de la estrategia. Revista Estudios Empresariales. Segunda época. N°1, p. 41-64.

Dobrzykowski , D; Tran, O; and Tarafdar, M. (2010). Value co-creation and resource based perspectives for strategic sourcing

Strategic Outsourcing: An International Journal, vol. 3, Issue 2.

Dyer, J.H. and Nobeoka, K. (2000). Creating and managing a high performance knowledge-sharing network: the Toyota case. Strategic Management Journal 21 (3), 345–367.

Dyer, J.H. and Singh, H. (1998). The relational view: cooperative strategy and sources of interorganizational competitive advantage. Academy of Management Review 23 (4), 660–679.

DIW Berlin (2008). An economic assessment of ICTadoption and its impact on innovation and performance. A cross sector e-business watch. Report from The European Commission, Enterpirse and Industry Directorate General.

EIM Business & Policy Research (2009). Final report. “EU SMEs and subcontracting”. Grant, R.M., 1996. Prospering in dynamically-competitive environments: organizational capability as knowledge integration. Organization Science 7 (4), 375–387.

Grossman, G. and Helpman, E. (2005). Outsourcing in a global economy. Review of Economic Studies, vol. 72, pp. 135–159.

Girma and Gorg (2004). “Outsourcing, Foreign Ownership, and Productivity: Evidence from UK Establishment-level Data,” Review of International Economics 12:817-832.

Görg, H., Hanley, A. & Strobl, E. (2004): Outsourcing, Foreign Ownership, Exporting and Productivity: an Empirical Investigation with Plant Level Data. Research Paper 04/08, GEP, University of Nottingham, Nottingham.

Görg, H. and Hanley, A. (2007). International services outsourcing and innovation: an empirical investigation. Research paper series, University of Nottingham. Electronic copy available at: http://ssrn.com/abstract=1048621.

Hagedoorn, J., 1993. Understanding the rationale of strategic technology partnering: interorganizational modes of cooperation and sectoral differences. Strategic Management Journal vol. 14, N°5, pp. 371–385.

Holl, A. (2004): Production Subcontracting and Location: Panel Data Evidence from Spanish Manufacturing Firms. Mimeo, Department of Town and Regional Planning, University of Sheffield, Sheffield. (Available in http://www.shef.ac.uk/tr1ah/spain03.pdf).

Jenster, P; Stener Pederson, H; Plackett, P and Hussey, D. Outsourcing-insourcing: Can vendors make money from new relationship opportunities?. John Wiley & Sons, May 2005.

Kimura, F. (2001). Subcontracting and the performance of Small and Medium firms in Japan. The International Bank for Reconstruction and Development/The World Bank, USA.

Kimura, F. (2001): Fragmentation, Internalization, and Interfirm Linkages: Evidence from the Micro Data of Japanese Manufacturing Firms. In L.K. Cheng $ H. Kierzkowski (Eds.), Global Production and Trade in East Asia. Boston: Kluwer Academic Publishers.

Kogut, B., Zander, U., 1992. Knowledge of the firm, combinative capabilities, and the replication of technology. Organization Science Vol. 3, N°3, pp. 383–397.

Leamer E.E., Storper M. (2001), The Economic Geographic of The Internet Age. NBER

Working Paper n°8450, Cambridge, MA.

Leamer E. (2007). A flat world, a level playing field, a small world after all, or none of the above: a review of Thomas L. Friedman's the World is Flat. Journal of Economic Literature XLV, pp 83-126

Lucking-Reiley, D. y Spulber D.F. (2001) Business to Business Electronic Commerce. Journal of Economic Perspectives-Vol.15, Nº1. pp.55-68.

McLaren, J. (2000): “Globalization and Vertical Structure”, American Economic Review, 90, p. 1239-1254.

Malone, T.W., Yates, J.A., Benjamin, R.J., (1989). “The logic of electronic markets.” Harvard Business Review 67/3, p. 166–170.

Mazzanti, M; Montresor, S. and Pini, P. (2007) Outsourcing and innovation: Evidence for a local production system of Emilia-Romagna. Innovation Management Policy Practice, Vol. 9, Issue: 3-4, Publisher: eContent Management Pty. Ltd, p. 324-342

Ono, Y. and Stango, V. (2005). “Outsourcing, firm size and product complexity: Evidence from Credit Unions”. Economic Perspectives, 1Q, pp 2-11.

OECD, Handbook on Economic Globalisation Indicators, Paris, 2005b.

Prahalad, C. K., and Hamel, G. (1990) “The Core Competence of the Corporation”, Harvard Business Review, vol. 68, No. 3, pp. 79-91.

Sadowski, B.M.; Maitland, C.and Van Dongen, J. (2002) “Strategic use of the Internet by small- and medium-sized companies: an exploratory study.” Information Economics and Policy 14, 75–93.

Souza, M.C. A.F., and Bacic, M. J. (2000). ¿Por que os programas de terceirização falham?. Enfoque Reflexão Contábil, vol 19, Nº2, pp 16-27.

Tomiura, E. (2004): Foreign outsourcing and firm-level characteristics: evidence from Japanese manufacturers. Hi-Stat Discussion Paper No. 64, Institute of Economic Research, Hitotsubashi University, Tokyo

United Nations Industrial Development Organisation (UNIDO), International Subcontracting Versus Delocalisation A Survey of the Literature and Case Studies from the SPX Network, Vienna, Austria, 2003. Available on the Internet at: http://www.unido.org/fileadmin/import/18187_SPXversusDELOCinonedoc.pdf

Williamson, 0. (1975). Markets and Hierarchies: Analysis and Antitrust Implications. Free Press, New York.

Williamson, 0. (1981) “The Economics of Organization: The Transaction Cost Approach.” American Journal of Sociology, vol 87, N°3, pp. 548-577.

Williamson, O. (1982) “The modern corporation.” Journal of Economic Literature, vol. 19 (December), pp. 1537-68.

Wynarczyk, P. The role of digital networks in supply chain development. New technology, work and employment, vol 15, N°2.

Yun, M. (1999) “Subcontracting relations in the Korean automotive industry: risk sharing and technological capability.” International Journal of Industrial Organization 17, 81–108.




DOI: http://dx.doi.org/10.4301/s1807-17752013000200007

Copyright (c)

Licensed under