Offshoring and Offshore Outsourcing by MNCs

In this paper, I examine the offshoring and offshore outsourcing decisions of multinational corporations for their home country operations. I explore how several strategic and organizational characteristics of MNCs, including their investments in intangible assets, the proportion of owned production in low cost countries and parent firm outward linkages with foreign operations, influence the global sourcing decisions of these firms. Empirical analyses using a comprehensive database of US MNCs and involving both continuous and discrete methods confirm these prediction and show significant differences in these characteristics across firms that offshore versus those that offshore outsource. Overall, this paper reveals how different strategic and organizational characteristics of MNCs influence their global sourcing decisions, while providing a comprehensive overview of the foreign sourcing activities of US MNCs.