This paper tests the assumption that international outsourcing may enhance firm competitiveness in international markets through potential cost-based and revenue-based gains. To this aim, we use a unique dataset on companies established in France in manufacturing industries for the year 1999. These data describe the breakdown of imports (respectively exports) by country of origin (respectively destination) at a product level, indicating the nature of goods that are traded (intermediary inputs vs. final goods) and its sourcing mode (market transaction vs. intra-firm trade). We conclude that international outsourcing boost the export performance while controlling for different firm, industry and country level parameters influencing the export behavior. In addition, we find that the causal relationship between imports of intermediary inputs and exports of final goods is mitigated by different factors. First, adopting a multi-sourcing strategy seems to amplify the effects of international outsourcing. It allows companies to appropriate a diversity of knowledge and to raise their bargaining power and flexibility. There appears also a country-of-origin effect: Importing intermediary inputs from one country increases exports to this same country. In addition, the leverage of external resources combined with intra-sourcing within the firm’s boundary seems to generate synergistic gains. Finally, the export experience increases marginal gains from outsourcing abroad. These main findings tend to highlight the role of international outsourcing to achieve global competitive advantages. From an economic policy perspective, they suggest that implementing protectionist measures to improve the balance of trade and safeguard employment could be counter-productive.
