We explore the relationship between proximity of buyers and sellers and the organizational form of outsourcing …. Outsourcing can be "contractual" in which suppliers undertake specific investments or involve "generic" market transactions …

Using the universe of large Canadian manufacturing firms in 1988 and 1996, we investigate to what extent outsourcing … outsourcing less likely; (ii) complementarities between the investments of the buyer and the seller are also associated with less … outsourcing; (iii) property rights predictions on the link between investment intensities and optimal ownership are only supported …