Information related service trade within firms: evidence from firm-level data in Germany

Multi-unit firms have productivity advantages over competitors because of their use of a non-rival asset—firm-specific knowledge—in several units. Using knowledge-intensive services leads to economies of scope in production by multi-unit firms. Such headquarter are usually supplied by parent compani...

Full description

Saved in:
Bibliographic Details
Published in:Review of world economics 2021-11, Vol.157 (4), p.703-726
Main Authors: Hafner, Kurt A, Kleinert, Jörn
Format: Article
Language:English
Subjects:
Averages
Companies
Competitors
Cross-border service flows
Economic Policy
Economic theory
Economics
Economics and Finance
Economies of scope
European Integration
Global economy
Imports
International Economics
International trade
Macroeconomics/Monetary Economics//Financial Economics
Micro-level productivity analysis
Multinational enterprises
Original Paper
Productivity
Services
Statistics
Subsidiaries
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Multi-unit firms have productivity advantages over competitors because of their use of a non-rival asset—firm-specific knowledge—in several units. Using knowledge-intensive services leads to economies of scope in production by multi-unit firms. Such headquarter are usually supplied by parent companies and serve to link different firm units. Headquarter services are difficult to quantify in statistics or surveys, except when they cross-borders and the exchange of services between MNEs and their offshore subsidiaries becomes apparent. This study therefore focuses on IT service imports to explain productivity differences among foreign affiliates of multinational firms in Germany. The authors base the analysis on the population of foreign multinational firms active in Germany and analyze what effect the import of IT services has on their productivity. They find that IT headquarter service flows have significant impacts on foreign affiliates’ productivity in general and US affiliates in particular. As the average IT-service flows (per firm and partner) from parent countries are significantly higher for US affiliates than non-US affiliates, they conclude that the import of IT services from the parent-company is a source of the productivity advantages of US affiliates in Germany.
ISSN:1610-2886
1610-2878
1610-2886
DOI:10.1007/s10290-021-00406-5