Organizational innovation and productivity growthAssessing the impact of outsourcing on firm performance

Resumen

It is widely accepted that innovation is a primary source of productivity growth. This paper is aimed at analyzing the relationship between organizational innovation and productivity. I focus on the role of one of the most relevant organizational methods, outsourcing. Specifically, this paper deals with outsourcing at the firm level and focuses on the role of contracting out of manufacturing activities. To address it, I develop and estimate a simple theoretical framework justifying the addition of outsourcing measures to the specification of a "traditional" production function. Using an unbalanced panel of Spanish manufacturing firms, I find that for manufacturing as a whole, both the outsourcing decision and its intensity have a positive effect on productivity. When analyzing industry level results, I find that outsourcing intensity has a positive effect on productivity, mainly for firms belonging to light industries, while the decision of starting (stopping) outsourcing has the expected positive (negative) effect on productivity.