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Production subcontracting and location

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Holl, Adelheid

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Abstract

Using data from a panel of Spanish manufacturing firms, I examine factors that explain firms' production subcontracting decisions and test whether there is any evidence that production subcontracting is facilitated in areas typically associated with higher agglomeration economies. The results show that location matters. Firms in industry agglomerations are more likely to subcontract production activities. While in general, larger and older firms as well as high wage firms show a greater probability for production subcontracting, industry agglomeration particularly facilitates subcontracting for smaller and lower wage firms and it allows firms to respond to a greater degree to expansive demand conditions by taking advantage of subcontracting.

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Publisher Info
Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 38 (2008)
Issue (Month): 3 (May)
Pages: 299-309
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Handle: RePEc:eee:regeco:v:38:y:2008:i:3:p:299-309

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    Other versions:
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  3. Deardorff, Alan & Djankov, Simeon, 2000. "Knowledge Transfer Under Subcontracting: Evidence from Czech Firms," World Development, Elsevier, vol. 28(10), pages 1837-1847, October. [Downloadable!] (restricted)
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  4. George J. Stigler, 1951. "The Division of Labor is Limited by the Extent of the Market," Journal of Political Economy, University of Chicago Press, vol. 59, pages 185. [Downloadable!] (restricted)
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  6. Ono, Yukako, 2003. "Outsourcing business services and the role of central administrative offices," Journal of Urban Economics, Elsevier, vol. 53(3), pages 377-395, May. [Downloadable!] (restricted)
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  9. Roodhooft, Filip & Warlop, Luk, 1999. "On the role of sunk costs and asset specificity in outsourcing decisions: a research note," Accounting, Organizations and Society, Elsevier, vol. 24(4), pages 363-369, May. [Downloadable!] (restricted)
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  12. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August. [Downloadable!] (restricted)
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  14. Shy, Oz & Stenbacka, Rune, 2003. "Strategic outsourcing," Journal of Economic Behavior & Organization, Elsevier, vol. 50(2), pages 203-224, February. [Downloadable!] (restricted)
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  17. EROL TAYMAZ & YILMAZ KILIÇASLAN, 2005. "Determinants of subcontracting and regional development: An empirical study on Turkish textile and engineering industries," Regional Studies, Taylor and Francis Journals, vol. 39(5), pages 633-645, July. [Downloadable!] (restricted)
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  20. Rosenthal, Stuart S. & Strange, William C., 2004. "Evidence on the nature and sources of agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 49, pages 2119-2171 Elsevier. [Downloadable!] (restricted)
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  24. Urata, Shujiro & Kawai, Hiroki, 2002. " Technological Progress by Small and Medium Enterprises in Japan," Small Business Economics, Springer, vol. 18(1-3), pages 53-67, Feb.- May. [Downloadable!] (restricted)
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  27. repec:fth:michin:454 is not listed on IDEAS
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  1. Manuel Artís & Raúl Ramos & Jordi Suriñach, 2007. "Job Losses, Outsourcing and Relocation: Empirical Evidence Using Microdata," IZA Discussion Papers 2978, Institute for the Study of Labor (IZA). [Downloadable!]
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  2. Carmen Díaz Mora, . "DETERMINANTS OF OUTSOURCING PRODUCTION: A Dynamic Panel Data Approach for Manufacturing Industries," Working Papers on International Economics and Finance 05-07, FEDEA. [Downloadable!]
  3. Bartel, Ann P. & Lach, Saul & Sicherman, Nachum, 2008. "Outsourcing and Technological Innovations: A Firm-Level Analysis," IZA Discussion Papers 3334, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
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