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Outsourcing and Firm Performance – A Comparative Study of Swiss and Greek Firms

This article aims at analyzing (i) the factors determining the firms' propensity to outsource various processes (production of intermediate products, production of final products, R&D activities, ICT activities), and (ii) the impact of outsourcing on firms' innovation performance, as well as labor productivity. The integral investigation of the determining factors, as well as the impact of outsourcing on innovation and productivity based on the same data in a comparative setting (Switzerland versus Greece) are important new elements and contributions of this study to the existing empirical literature. It has been concluded that in both countries more innovative firms (R&D) were stronger inclined to outsourcing activities than less innovative ones, whereas on the contrary, the educational level of employees and the labor cost showed no effect on outsourcing in both countries. Also, the intensity of ICT use and organizational aspects, especially those related to the formal structure of workplace organization, were relevant for the Swiss firms but not for the Greek firms. With respect to the impact of outsourcing on performance, it has been concluded that it tends to enhance innovation, particularly process innovation, but only weakly productivity (at least directly). Copyright 2013 The Author 2012. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.