When Do Multinational Firms Outsource? Evidence From the Hotel Industry
نویسنده
چکیده
Multinational rms face two questions in deciding whether or not to outsource a stage of production. First, where should production be located? Second, who should own or control the productive assets? In this paper, we test two theories of these outsourcing decisions and we focus on the predictions for the ownership/control decision. We adapt the Antras and Helpman (2004) property rights and Grossman and Helpman (2004) managerial incentives models of the multinational rm to a setting in which a hotel headquarters chooses the size and organizational form of each of its hotel properties. The property rights mechanism predicts a monotonic relationship between the size of a hotel and the probability that it is owned by the headquarters. The managerial incentives mechanism predicts an inverted-U relationship between size and the likelihood that the headquarters controls the hotel; small and large hotels are likely to be managed by a third party, while medium-sized hotels are likely to be managed by the headquarters. We test these propositions using new data on the organizational form, location, and size of more than 4000 hotel properties that operate under 15 di¤erent brands in 103 countries. Four hotel brands exhibit patterns that are consistent with either mechanism. For three other brands, organizational structures are consistent with the predictions of the managerial incentives mechanism and inconsistent with the predictions of a model based solely on property rights concerns. These results suggest that agency problems are an important inuence on the organizational choices of multinational rms. However, the relative importance of agency and holdup problems may vary substantially across brands. We are grateful to Pol Antras, Gary Chamberlain, Elhanan Helpman, Bryan Lincoln, Marc Melitz, Matthew Slaughter and seminar participants at Harvard, MIT, the 2004 NBER ITO Meeting and the 2007 Dartmouth/Tuck Summer Camp for helpful comments. Rembrand Koning and Julia Zhou of the Paul Milstein Center for Real Estate at Columbia Business School provided excellent research assistance. Lin bene ted from nancial support from the Bradley Foundation and from the Harvard Economics Department, and Thomas bene ted from nancial support from Harvard Business School and Columbia Business School. All errors are our own. E-mail: [email protected], [email protected].
منابع مشابه
Key drivers of innovative behavior in hotel industry: evidence from a developing country
The purpose of this paper is to determine the key drivers of innovative behavior of employees in hotel industry using evidence from a developing country. Measurement items were adapted from existing scales found in the organizational behavior literature. Academic colleagues reviewed the items for face validity and readability. The scales were evaluated for reliability, convergent validity, and ...
متن کاملThe impact of worker bargaining power on the organization of global firms ¬リニ
c Centre d'études prospectives et d'informations internationales (CEPII), France a b s t r a c t a r t i c l e i n f o JEL classification: F14 F23 J5 Keywords: Worker bargaining power Labor market imperfections Outsourcing Multinational firms Do variations in labor market institutions affect the cross-border organization of the firm? Using firm-level data on multinationals located in France, we...
متن کاملOutsourcing and Vertical Integration in a Competitive Industry
We develop a partial equilibrium, perfectly competitive framework of a (potentially) vertically integrated industry. There are three types of firms: upstream firms that use primary factors to produce an intermediate good; downstream firms that use primary factors and intermediate goods to produce a final good; and vertically integrated firms that do both. We establish conditions under which ver...
متن کاملR&D offshoring and technology learning in emerging economies: Firm-level evidence from the ICT industry
This paper studies the impact of the R&D offshoring of multinational enterprises on the firms in host emerging economies. We develop a two-stage non-cooperative game to analyze the strategic interaction between multinational and host country enterprises engaged in R&D investment. An empirical analysis of 12,309 manufacturing firms in the ICT industry in China shows that R&D offshoring has a pos...
متن کاملVertical Specialization in Multinational Firms*
In the recent decades, growth of overall world trade has been driven in large part by the rapid growth of trade in intermediate inputs. This input trade results in part from multinational firms choosing to outsource input processing to their foreign affiliates, thereby creating global production networks in which each actor is vertically specialized. In this paper, we use firm-level data on U.S...
متن کامل