The emergence of the outsourcing market and product technological performance

• The impact of product technological performance on the growth of the outsourcing is studied.
• The impact of product technological performance on market demand is studied.
• Global demand for laptop computers correlates with product technology improvements.
• Growth of outsourcing activities and product technological performance are correlated.
• OEM's offshoring activities and product technological performance are correlated.

This study is a novel empirical endeavor to analyze the impact of market demand and product technological performance on the growth of industry's outsourcing activities. Using the laptop computer industry as an example, this study examines the connection between the growth of outsourcing activities and product technological performance as well as market demand. The results suggest that, in addition to the relative efficiency assumed from transaction cost economies, the products' technological performance and market demand might also influence the growth of industry's outsourcing activities.