Outsourcing through an Empirical Lens : a Tale of Two Growths

This paper explores the dynamics of outsourcing and the choices made by firms at very early ages through an empirical lens. Two growth strategies are identified, one with minimal outsourcing and one with almost total outsourcing. The group with minimal outsourcing is initially larger in turnover and keeps its superiority as they grow. They grow to larger sizes, create more jobs, pay higher wages, and are more likely to export and conduct research. Growing by mostly outsourcing, however, makes firms apter at survival. From a policy point of view, growing by minimal outsourcing seems to be the proper pathway to a thriving and dynamic economy