Scandinavian Working Papers in Business Administration

Working Papers,
Örebro University, School of Business

No 2016:7: Immigrant Employment and the Contract Enforcement Costs of Offshoring

Andreas Hatzigeorgiou (), Patrik Karpaty (), Richard Kneller () and Magnus Lodefalk ()
Additional contact information
Andreas Hatzigeorgiou: Ratio, Postal: Box 3203, SE-103 64 Stockholm, Sweden
Patrik Karpaty: Örebro University School of Business, Postal: Örebro University, School of Business, SE - 701 82 ÖREBRO, Sweden
Richard Kneller: University of Nottingham, Postal: School of Economics, Sir Clive Granger Building, The University of Nottingham, University Park, Nottingham, NG7 2RD, United Kingdom
Magnus Lodefalk: Örebro University School of Business, Postal: Örebro University, School of Business, SE - 701 82 ÖREBRO, Sweden

Abstract: Offshoring continues to be an important dimension of firms’ internationalization choices. However, offshoring also increases contract enforcement costs by inhibiting the coordination and monitoring of performance. Immigrant employees may reduce such costs through their specific knowledge of the employer, their country of birth and access to foreign networks. We develop a heterogeneous firm framework with immigrants and offshoring costs, including technology leakage. In the model, immigrant employees augment the supervisory services of headquarters and limit technology leakage, thereby reducing contract enforcement costs. Then, we bring our conjectures to rich administrative Swedish microlevel data that include specific information about the characteristics of employees, manufacturing firms and their bilateral offshoring. Our results support the hypothesis that immigrant employees increase offshoring intensity by lowering contract enforcement costs. Hiring one additional immigrant employee can increase offshoring by up to three percent on average, with the strongest effects found for skilled immigrant employees.

Keywords: Offshoring; contract enforcement; immigrant employees; networks; information.

JEL-codes: D21; D83; F14; F22; F23

Language: English

38 pages, First version: December 22, 2016. Revised: February 1, 2022.

Full text files 

wp-7-2016.pdf PDF-file

Download statistics

Questions (including download problems) about the papers in this series should be directed to ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:hhs:oruesi:2016_007This page generated on 2024-11-09 04:36:08.