1 Top - tier Versus Bottom - tier Outsourcing
نویسندگان
چکیده
We develop a three-tier model of international outsourcing in which intermediate firms in a middle-tier country choose between outsourcing their production activities to a bottom-tier country and contracting out their R & D activities to a top-tier country. Managerial ability augments innovation activities, and there exists a threshold level of managerial ability beyond which intermediate firms will choose bottom-tier outsourcing over top-tier outsourcing. Among other things, we demonstrate that this threshold level falls as the country approaches the world technology frontier and when there is an exogenous increase in the supply of skilled workers in the country. Wage gap increases (decreases) as bottom – (top -) tier outsourcing becomes more prevalent.
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