المجلة الدولية للاداء الاقتصادي
Volume 4, Numéro 3, Pages 71-88
2021-12-30

Foreign Direct Investments, International Outsourcing And Subcontracting: The Underlying Logics



Authors : Haddadi Riad . Merzoug Slimane .

Abstract

In this paper, we put into perspective international outsourcing and subcontracting, as alternative strategies of firm internationalization. We also identify the trade-offs that allow the firm to choose between integration or outsourcing. Our main results show that if asset ownership is separable without the risk of losing its competitive advantage, the firm should opt for outsourcing through international subcontracting, provided that the transaction costs are lower than the control costs of a foreign subsidiary.

Keywords

Foreign direct investment ; Outsourcing ; Subcontracting ; Production fragmentation

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