To Diversify or Not? The Link between Global Sourcing of ICT Goods And Firm Performance

Abstract

We analyse variation in firm performance as a function of the international diversification of ICT imports by firms. Drawing on administrative data from 2010 and 2014 on nearly 4000 German manufacturing firms, we find that firms with ICT sourcing that is diversified across multiple countries perform better than similar, less-diversified firms. This finding holds true for two performance metrics (value added and gross operational surplus) as well as for two indicators of diversification. Our paper thus contributes to deliberations on Europe's digital sovereignty.