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Journal Articles
May 2006 (European Economic Association)
Article
Outsourcing and offshoring of business services: the role of ICT
Type: Journal Articles
Volume, issue, pages: Vol. 4, No. 2-3, pp. 594-601
JEL classification: D21, F23, L23
Previous version: IFS Working Papers [Details]

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This paper considers the impact that information and communication technology (ICT) has on firms' choices over organisational form. In particular, the decision over whether to produce in-house or outsource services, and the decision over the location of activity. ICT reduces the transaction and adjustment costs of moving activity outside the firm, and of carrying it out at greater geographic distance. We find that more ICT-intensive firms purchase a greater amount of services on the market and they are more likely to purchase offshore than less ICT-intensive firms.

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