Determinants of Offshoring: Empirical Evidence from Ireland

We analyse determinants of an enterprise's decision to offshore business activities using an unique data set for enterprises in Ireland over the period 2001-2006. Our results suggest that, on average, other things equal, larger, more productive enterprises, foreign-owned enterprises and those which used information and communication technologies (ICT) were more likely to offshore. Furthermore, characteristics of the import source region had an important influence on enterprise offshoring behaviour, with offshoring to regions outside of the advanced European Union's economies being less likely. Further, we find that patterns of offshoring differed between service and manufacturing enterprises. Finally, it appears that the type of business function that was offshored impacted on the strength of the link between the enterprise's decision to offshore and offshoring determinants.