Aoife Hanley

Productivity effects of international outsourcing: evidence from plant‐level data

We investigate the impact of international outsourcing on productivity using plant level data for Irish manufacturing. Specifically, we distinguish the effect of outsourcing of materials from services inputs. Moreover, we examine whether the impact on productivity is different for plants being more embedded in international markets through exporting or being part of a multinational. Our results show robust evidence for positive effects from outsourcing of services inputs for exporters, either domestic- or foreign-owned. By contrast, we find no statistically significant evidence of an impact of international outsourcing of services on productivity for firms not operating on the export market.

R&D and Exporting: A Comparison of British and Irish Firms

This paper investigates the two-way relationship between R&D and export activity. In particular, we concern ourselves with the question whether R&D stimulates exports and, perhaps more importantly, whether export activity leads to increasing innovative activity in terms of R&D (learning-by-exporting). We use two unique firm level databases for Great Britain and the Republic of Ireland and compare the results for these two countries. We find that previous exporting experience enhances the innovative capability of Irish firms. Conversely, no strong learning-by-exporting effects are found for British firms. Arguably part of the differences between Ireland and Britain are attributable to different, cross-country exporting patterns where Irish firms have a greater interface with OECD markets.

Labour Demand Effects of International Outsourcing: Evidence from Plant Level Data

We examine empirically the effect of international outsourcing on labour demand at the level of the individual plant. We do so by estimating a dynamic model of plant level labour demand, using a Generalised Method of Moments estimator. We use plant level data for the Irish Electronics sector, an industry that has expanded rapidly over the last decade and that has witnessed significant offshoring activity . Our results suggest that, in the short run, there are significant reductions in plant level labour demand, which we attribute to the use of international outsourcing. There appear to be stronger negative effects from outsourcing of materials than from services outsourcing.

SERVICES OUTSOURCING AND INNOVATION: AN EMPIRICAL INVESTIGATION

We provide a comprehensive empirical analysis of the links between international services outsourcing, domestic outsourcing, profits and innovation using plant level data. We find a positive effect of international outsourcing of services on innovative activity at the plant level. Such a positive effect can also be observed for domestic outsourcing of services, but the magnitude is smaller. This makes intuitive sense, as international outsourcing allows more scope for exploiting international factor price differentials, therefore giving the establishment higher profits and more scope to restructure production activities towards innovation. We also find that international outsourcing has a positive effect on profitability, as predicted by theory, while this is not true for domestic sourcing. The results are robust to various specifications and an instrumental variables analysis.

Outsourcing, Foreign Ownership, Exporting and Productivity: An Empirical Investigation with Plant Level Data

We investigate the impact of international outsourcing on productivity using plant level data for Irish manufacturing. Specifically, we distinguish the effect of outsourcing of materials from services inputs. Moreover, we examine whether the impact on productivity is different for plants being more embedded in international markets through exporting or being part of a multinational. Our results demonstrate that these distinctions can in general be important and are line with implications from the recent theoretical literature.

The impact of foreign direct investment on new firm survival in the UK: evidence for static versus dynamic industries

The paper examines the impact of Foreign Direct Investment (FDI) on the survival of business start-ups. FDI has potential for both negative displacement/competition effects as well as positive knowledge spillover and linkage effects on new ventures. We find a net positive effect for the whole dataset. However, a major contribution of the paper is to outline and test an argument that this effect is likely to be comprised of a net negative effect in dynamic industries (high churn: firm entry plus exit relative to the stock of firms) alongside a net positive effect in static (low churn) industries. We find evidence to support this view. The results identify new effects of globalisation on enterprise development with associated challenges for industrial policy.

Surviving the Crisis: Foreign Multinationals Versus Domestic Firms

Starting from the observation that all firms in Ireland (foreign and domestic in manufacturing and services industries) were hit by the crisis, the paper asks whether there is a difference in the behaviour of foreign and domestic firms. One hypothesis is that foreign multinationals are less linked into the Irish economy, so more likely to leave once the economy is hit by a negative shock. The paper discusses background hypotheses before giving empirical evidence from firstly aggregate data, and secondly firm-level observations. The analysis of the latter suggests that foreign firms are not more likely to leave during the crisis than Irish firms. Some policy conclusions are offered in the paper.

BANK INTEREST MARGINS AND BUSINESS START-UP COLLATERAL: TESTING FOR CONVEXITY

The paper investigates the relationship between bank interest rate margins and collateral for loans issued to new ventures. The analysis finds a convex U-shaped relationship. The results indicate that while provision of collateral initially reduces bank exposure to risk (through security, more optimal levels of capital and lower moral hazard among entrepreneurs) that beyond a point, the positive risk-wealth association gives rise to greater risk taking propensity among entrepreneurs and ultimately higher interest rates. This indicates that a lenders pricing policy may even somewhat help to level the competitive playing field between ventures launched by higher and moderately wealthy entrepreneurs.

Spillover effects in long-haul visitors between two regions

Gooroochurn N. and Hanley A. (2005) Spillover effects in long‐haul visitors between two regions, Regional Studies 39 , 727–739. A new body called Tourism Ireland, funded jointly by the British and Irish Governments, has been set up to promote tourism for the entire island of Ireland. This study investigates whether such an initiative is mutually beneficial for the Republic of Ireland (ROI) and Northern Ireland (NI). It is argued that joint promotion of the island is viable only if interregional tourism demand spillovers are generated. A spillover arises when tourists who visit the ROI also visit NI, and vice versa. The interconnectedness between the two regions’ long‐haul visitor demand was investigated empirically and it was found that spillovers are significant, albeit asymmetric. NI tourism demand rises 3.2% for every 10% increase in ROI tourism demand, while the latter increases 1.1% for every 10% increase in NI demand.

International Services Outsourcing and Innovation: An Empirical Investigation

We provide a comprehensive empirical analysis of the links between international services outsourcing, wages and innovation using plant level data covering the period 2000 to 2004. Somewhat consistent with the predictions of recent theory, we observe a positive relationship between international outsourcing of services and innovative activity, measured in terms of R&D, at the plant level. However, we only find evidence for such positive effects for plants in manufacturing, not in services sectors. Furthermore, this positive effect of international services outsourcing on innovation does not appear to be mediated through wages as proposed by theory.