Business Intelligence

Hightech-Flyers: Contract Type, Organizational Form, And The Timing To Offshore In The Global HDD Industry

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Executive Summary

This paper studies firms' decision to start offshore production. The author constructs a comprehensive panel dataset of 178 firms producing Hard Disk Drives (HDDs) in the world between 1976 and 1998, which records contractual types, destination countries, and the timing of offshoring as well as firms' organizational forms. The author finds that offshorers, particularly earlier ones, survive better in the long run, firms tend to make in the South whereas contract manufacturing occurs in the North, and specialized startups are more inclined to offshore than conglomerates or vertically integrated firms. These heterogeneities are previously unnoticed but likely to shape the course of industry evolution in a broader set of manufacturing sectors.

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