Accession Number PB2013-111007
Title Breaking Up is Hard to Do: Why Firms Fragment Production Across Locations.
Publication Date Jul 2013
Media Count 58p
Personal Author T. C. Fort
Abstract This paper documents the relative importance of labor cost differences, distance to suppliers, and communication technology in a firm's domestic and foreign sourcing decisions. Using an original dataset of U.S. manufacturers' decisions to contract for manufacturing services, I show that domestic fragmentation: (i) is far more prevalent than offshoring; (ii) changes firms' opportunity cost to offshore; and (iii) is facilitated by communication technology. In contrast, communication technology does not necessarily lead firms to offshore. Firms fragment production to access cheaper labor, and countries that offer significant labor cost savings tend not to have the technology infrastructure to support high-tech production.
Keywords Businesses
Communication systems
Contracts
Economic analysis
Fragmentation
Labor costs
Manufacturing
Offshoring
Outsourcing
Production
Services
Technology assessment


 
Source Agency Department of Commerce, Bureau of Census
NTIS Subject Category 96 - Business & Economics
96C - International Commerce, Marketing, & Economics
Corporate Author Dartmouth Coll., Hanover, NH. Amos Tuck School of Business Administration.
Document Type Technical report
Title Note N/A
NTIS Issue Number 1324
Contract Number N/A

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