Adaptation and the Boundary of Multinational Firms

Abstract

This paper offers the first empirical analysis of the impact of adaptation on the boundary of multinational firms. To do so, we develop a ranking of sectors in terms of “routineness” by merging two sets of data: (i) ratings of occupations by their intensities in “solving problems” from the U.S. Department of Labor’s Occupational Information Network; and (ii) U.S. employment shares of occupations by sectors from the Bureau of Labor Statistics Occupational Employment Statistics. Using U.S. Census trade data, we then demonstrate that the share of intrafirm trade tends to be higher in less routine sectors.