Thesis (Ph. D.)--Harvard University, 1992. / Includes bibliographical references (p. 457-466).

Thesis (Ph. D.)--University of Toronto, 1994. / Includes bibliographical references (leaves 239-245).

published_or_final_version / Surveying / Master / Master of Science

This dissertation examines three topics in macroeconomics. The first chapter studies the impact of severance payments on employment when firms can subcontract as a substitute for hiring workers. In countries with strict job security regulations firms use flexible staffing arrangements to buffer the regular workforce from economic fluctuations and avoid workers' firing costs. I set up a general equilibrium model in the tradition of Hopenhayn and Rogerson (1993) where firms can hire two types of workers: subcontractors that are totally flexible, and permanent workers that entail firing costs that increase with seniority in the job. Both types are perfect substitutes in production, but permanent workers are relatively less expensive as subcontractors' charges are higher than the firm's own production costs. I estimate the model using a simulated method of moments by fitting employment growth dynamics of Chilean manufacturing plants. I find that allowing firms to subcontract workers increases output, employment and productivity. This effect is stronger on output as subcontracted workers allow firms to respond more aggressively to productivity shocks, which enhances the allocation of labor across firms and hence total factor productivity (TFP). When firms can subcontract, the negative effects of firing costs are less than previously estimated in the literature. The second chapter analyzes the effects of capital adjustment costs on quantity dynamics and asset prices in a real business cycle model when the representative agent has Epstein-Zin preferences. Capital adjustment costs make it costly for agents to smooth fluctuations in consumption through the production sector, inducing them to take more consumption risk. I show this model accounts for the main statistical features of macroeconomic aggregate quantities. At the same time, adjustment costs increase the equity risk premium, with the mean stock return and its standard deviation in the order of magnitude consistent with the data. The model also produces a stable risk-free rate, and comes close to matching its average return. Finally, the third chapter (with Shuheng Lin) empirically examines the contribution of firm-level idiosyncratic shocks to aggregate fluctuations in the US, Germany, Canada, and the UK. We find shocks to large firms are of little relevance in the UK or Canada, but roughly explain one third of output fluctuations in the US and Germany. We argue the ability of the largest firms to transmit shocks is not universal, even when the firm size distribution is highly skewed as the theory suggests (Gabaix, 2011).

The world today consists of a global economy, with highly competitive markets in every country. In this arena companies are faced with continually declining profit margins, having to keep costs to a minimal, as well as continually developing Information Systems and Technology. All of these factors have a snowball effect on every other country in the world, providing challenges where there were none before. Companies start to focus on their core competencies, striving to be a benchmark in their industries. All their energies, resources and capital need to be channeled in this direction if they are to succeed. This then begs the question: Who will focus on these companies' non-core functions? The answer is a simpler one - a company whose core business it is to perform another company's non-core functions. One only needs to choose the third party service provider best suited to the company, and outsource your non-core functions to them. These third party service providers can easily incorporate a company's functions into their supply chains, and perform them more efficiently than the outsourcing company. But why focus on outsourcing of the logistics function (which entails transportation, warehousing and 10gisticaIIT)? Internationally this function has been the starting point of outsourcing, and is really only in its infant stages in South Africa. The research will show that even today only some of the areas of this function are being outsourced, whilst the others are still kept in-house. This study will show if there are underlying factors influencing the decision of companies to either outsource or retain their logistics function in-house. The perceived benefits of these two options are also discussed. This study is a formal one. Stated hypotheses will be statistically tested using parametric as well as non-parametric measures. Primary data will be collected through a questionnaire. All relevant literature will be examined and discussed in detail to provide the necessary background. Lastly, the results and findings of the study will be discussed, and recommendations will be made as to viable options in the outsourcing arena. These recommendations should be attempted if South Africa is to catch up with trends in the international outsourcing arena. / Thesis (MBA)-University of Natal, Durban, 2004.

Abstract Manufacturing companies have reorganised their value chains and outsourced their non-core activities at an increasing rate during the last two decades. The importance of subcontractors has grown both from the economic and production point of view. The new manufacturing paradigm that emphases outsourcing, co-operation, networking and agility is much discussed on the general level, but very little empirical research has been done on these issues. The main aim of the study is to increase the understanding of the evolution process of subcontracting chains and explain the managerial aspects connected with the subcontractors' evolution. In the theoretical part I of the study, the concepts of subcontracting are clarified. The forms to classify subcontractors are discussed as the structure and development of subcontracting systems. The lean supply philosophy and manufacturing strategy concept are presented as a basis for the study. The manufacturing strategy framework for subcontractors is presented. The empirical findings of this study are based on longitudinal case studies covering the time period from the early 1980's to the late 1990's. Three cases from the metal and electronics industry including an OEM and a few subcontractors are presented. The studies focuses on the factors affecting the evolution of subcontracting, especially the impacts of subcontractors' manufacturing strategy on supply chain decisions. The implications of the case studies allow a number of conclusions to be drawn. The main differences from the lean supply theory was in supplier development and supply chain management practices The production volume, product structure and supplier base were the most important points affecting the subcontracting chain structure. The process of assigning manufacturing to subcontractors happened gradually and included critical points, which should be evaluated. The evolution process of subcontractors from a part supplier towards a system supplier is discussed. The competitiveness of the subcontractors evolves gradually starting from quality and adding other capabilities. In order to develop the subcontracting chain the stage of evolution of subcontractors should be recognised. A conceptual model for four different stages, part, component, specialist and system supplier, was also created in this study.

published_or_final_version / Urban Studies / Master / Master of Social Sciences

This research is concerned with scheduling production over a finite planning horizon in a capacitated manufacturing facility. It is assumed that a second source of supply is available by means of subcontracting and that the demand varies over time. The problem is to establish the production level in the facility and/or the ordering quantity from the subcontractor for each period in the planning horizon. Firstly, the cost functions are analyzed and two types of realistic production cost models are identified. Then mathematical models are developed for two different problems. One is a single criterion problem aimed at minimizing the total production and inventory costs. The other is a bicriterion problem which seeks the efficient frontier with respect to the total cost and the number of subcontractings, both to be minimized, over the planning horizon. For each of the above, two methods, namely, a general dynamic programming approach and an improved dynamic programming approach (Shortest path method) are presented. Several results are obtained for reducing the computations in solving these problems. Based on these results, algorithms are developed for both problems. The computational complexity of these algorithms are also analyzed. Two heuristic rules are then suggested for obtaining near-optimal solutions to the first problem with lesser computation. Both rules have been tested extensively and the results indicate advantages of using them. One of these rules is useful for solving the uncapacitated problem faster without losing optimality. The above results are then extended to other cases where some of the assumptions in the original problem are relaxed. Finally, we studied the multi-item lot-sizing problem with the subcontracting option and proposed a heuristic for solving the problem by the Lagrangean relaxation approach. We demonstrated that with an additional capacity constraint in the dual problem the feasible solution and the lower bound obtained during each iteration converge much faster than without it. After testing some randomly generated problems we found that most of the solutions obtained from the heuristic are very close to the best lower bound obtained from the dual problem within a limited number of iterations.

Our economy is going global. Open borders and the internet have created endless possibilities for companies to source products and services internationally. This phenomenon, outsourcing, is widely studied among large companies, usually referring to them offshoring parts of their operations to increase business and cost efficiency. However, thanks to platforms like Fiverr and UpWork, outsourcing has become accessible to anyone and plays a significant role also in startups. Using semi- structured interviews to draw on the experiences of nine entrepreneurs, we find that startups use outsourcing with different motivations than larger companies. Rather than cost reductions, compensating for skills that startups lack internally is the main reason for entrepreneurs to outsource. Increasing flexibility to react to the dynamic environment startups navigate in and the possibility to grow and scale quickly are also frequently mentioned drivers for outsourcing. Opposing the potential of outsourcing, most entrepreneurs see little to no risk associated with the process. Aside from the potential lack of quality of the deliverables, startups primarily fear the loss of intellectual property that could harm their competitive advantage. As this thesis shows that outsourcing within startups is fundamentally different from the traditional outsourcing of established firms, it recognizes entrepreneurial outsourcing as an individual field of research and defines it as “the concept of flexibly adjusting a startup’s access tocompetence, resources, and capacity according to rapid internal or external changes by sourcing products or services from external providers”.

Veteran-owned small businesses that possess ratings as service-disabled companies (i.e., service-disabled, veteran-owned small businesses [SDVOSB] are 1 of 5 socioeconomic small business contracting goals that U.S. government agencies seek to comply with U.S. Small Business Administration (SBA) set-aside goals. Little is known about collaborative strategies for improving training regarding single point of entry into Department of Defense (DOD) subcontracting. The research questions in this study focus on how veteran-owned small businesses pursue acquisition opportunities from training opportunities. Sabatier's advocacy coalition theory was used as the theoretical foundation for this study. This qualitative study was employed using 6 semistructured interviews of small business owners who possessed SDVOSB status and a content analysis of training policies from corporate supplier diversity offices, procurement assistance centers, small business development centers, and DOD Office of Small Business programs from a midwestern city. The emergent themes were (a) availability of training from procurement support assistance agencies is of limited value to mature small businesses; (b) additional support and training are needed for subcontractors desiring to enter the DOD subcontracting market; (c) significant obstacles are present in gaining access to federal subcontracting opportunities, including complex acquisition strategies and selection of contract type; and (d) understanding and enforcement of SDVOSB regulations were perceived as insufficient. SDVOSB entities can use these findings to comprehend what questions to ask about subcontracting training.