New Outsourcing, Demand Uncertainty and Labor
Usage
Sasan Bakhtiari
1,2
•
Robert Breunig
2
Published online: 1 July 2016
Ó Springer Science+Business Media New York 2016
Abstract We examine the decisions by small and medium-sized Australian firms to
undertake new outsourcing. We hypothesize that new outsourcing may be related to
demand uncertainty. We test this hypothesis at the firm level, making use of unique
longitudinal data on Australian manufacturing. We find an asymmetric relationship
between new outsourcing and demand uncertainty. For the larger firms in our
sample, positive demand shocks are related to more new outsourcing. For all firms,
negative demand shocks are related to less new outsourcing. New outsourcing
appears to be related to demand uncertainty and to the firm’s overall approach to
labor utilization.
Keywords Business strategy Á Demand uncertainty Á Labor adjustment Á
Outsourcing
JEL Classification D22 Á L21 Á L24 Á L6
Disclaimer Views expressed in this paper are those of the authors and not necessarily those of the
Department of Industry, Innovation and Science or the Australian government. Use of any results from
this paper should clearly attribute the work to the authors and not to the department or the government.
& Robert Breunig
robert.breunig@anu.edu.au
Sasan Bakhtiari
sasanb@gmx.com
1
Australian Department of Industry, Innovation and Science, 10 Binara Street, Canberra,
ACT 2600, Australia
2
Crawford School of Public Policy, Australian National University, Canberra, ACT 0200,
Australia
123
Rev Ind Organ (2017) 50:69–90
DOI 10.1007/s11151-016-9529-9
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