We present a dynamic model where the probability of outsourcing production is increasing in the firm’s expectation of … outsourcing. No prior study has been able to provide such causal evidence. Our results are robust to the inclusion of detailed … characteristics of the firms as well as firm fixed effects. -- Outsourcing ; technological change …

influence the demand for outsourcing. We show that outsourcing becomes more beneficial to the firm when technology is changing … expensive than outsourcing. The model therefore provides an explanation for the recent increases in outsourcing that have taken … model, namely, that all other things equal, the demand for outsourcing increases with the probability of technological …

In this paper we argue that an important source of the recent increase in outsourcing is the computer and information … technological change increases outsourcing because it allows firms to use services based on leading edge technologies without … outsourcing costs of IT-based services generating a positive correlation between the IT level of the user and its outsourcing …