TY  - JOUR
AU  - Antràs,Pol
AU  - Garicano,Luis
AU  - Rossi-Hansberg,Esteban
TI  - Organizing Offshoring: Middle Managers and Communication Costs
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12196
PY  - 2006
Y2  - May 2006
UR  - http://www.nber.org/papers/w12196
L1  - http://www.nber.org/papers/w12196.pdf
N1  - Author contact info:
Pol Antràs
Department of Economics
Harvard University
1805 Cambridge Street
Littauer Center 207
Cambridge, MA 02138
Tel: 617/495-1236
Fax: 617/495-8570
E-Mail: pantras@fas.harvard.edu

Luis Garicano
Departments of Management and Economics and
Centre for Economic Performance
London School of Economics
Houghton Street
London WC2A 2AE
United Kingdom
E-Mail: garicano@lse.ac.uk

Esteban Rossi-Hansberg
Princeton University
Department of Economics
Fisher Hall
Princeton, NJ 08544-1021
Tel: 609/2584024
Fax: 650/725-5702
E-Mail: erossi@princeton.edu
M2  - featured in NBER digest on 2006-05-08
AB  - Why do firms decide to offshore certain parts of their production process? What qualifies certain countries as particularly attractive locations to offshore? In this paper we address these questions with a theory of international production hierarchies in which organizations arise endogenously to make efficient use of agents' knowledge. Our theory highlights the role of host-country management skills (middle management) in bringing about the emergence of international offshoring. By shielding top management in the source country from routine problems faced by  host country workers, the presence of middle managers improves the efficiency of the transmission of knowledge across countries. The model further delivers the prediction that the positive effect of middle skills on offshoring is weaker, the more advanced are communication technologies in the host country. We provide evidence consistent with this prediction.
ER  -