Offshoring is a prominent business activity of American firms. This paper defines two types of offshoring that they practice. Intra-firm transactions, and arms-length transactions. When moving production abroad American Firms must choose between buying a good over the market, or opening facilities to make the good themselves. This paper outlines the make or buy decision by American firms with a transaction cost economics approach. I hypothesize that country specific effects like market thickness and legal strength influence this decision, as well as industry specific affects like asset specificity. I empirically test this choice using a sample of 163 countries, and 24 different industries through the related party database, which was developed by the US Census Bureau. I find statistically significant results that corroborate my hypothesis and align with the theory in the literature.


Histen, Joe



Publication Date


Degree Granted

Bachelor of Arts

Document Type

Senior Independent Study Thesis



© Copyright 2018 Aidan Crowe