Title: Globalisation strategy: foreign direct investment or international outsourcing trade?

Authors: Chu-Ping Lo, Guang-Jong Fann

Addresses: Department of Agricultural Economics, National Taiwan University, Taipei 10617, Taiwan. ' Department of Economics, National Cheng Kung University, Tainan 701, Taiwan

Abstract: In Antras and Helpman|s (2004) model, the most productive firms prefer foreign direct investment (FDI) to international outsourcing in their globalisation strategy. This paper adds Griliches|s production function to Antras and Helpman|s (2004) model in order to determine how an endogenalized headquarter services reshape firms| global organisational structures. We argue that while an intensive headquarter services help reduce incomplete contract distortion, the most productive firms with a sufficiently high headquarter service intensity may prefer international outsourcing to FDI.

Keywords: international outsourcing; FDI; foreign direct investment; FDI; HQ services; headquarters services; globalisation strategies; production functions; Zvi Griliches; Pol Antras; Elhanan Helpman; endogenalised headquarters; reshaping; global structures; organisational structure; contract distortion; productivity; service intensity.

DOI: 10.1504/IJMED.2010.036119

International Journal of Management and Enterprise Development, 2010 Vol.9 No.2, pp.147 - 157

Published online: 22 Oct 2010 *

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