Does Outsourcing Increase Labour Productivity? Evidence for a Local Production System in Emilia Romagna (Italy)

Empirical evidence shows that outsourcing of both intermediate inputs and business production services has risen dramatically in the last two decades (Kirkegaard, 2005; Spencer, 2005). This has spurred a substantial interest in the issue, ranging from the economics of the firm, through industrial organization, to international trade. In particular, attention has focused on the analysis of outsourcing determinants, leading to the formulation and empirical test of a number of theories of the so-called ‘vertical scope of the firm’. Standard transaction-cost-econom- ics (TCE) based explanations (Grossman and Helpman, 2002) have thus been both contrasted (Mahnke, 2001) and integrated (Jacobides and Winter, 2005) with capabilities and competences based ones and, more recently, with an entrepreneurship kind of perspective (Zander, 2007). These explanations have found several specifications and integrations when they have been applied to the very special case of international outsourcing, or offshoring. Such phenomena as ‘international fragmentation of production’ (Jones and Kierzkowski, 2001), international trade in intermediate commodities and in services, and MNC networks (Kleinert, 2003) actually add to the picture and make the international analysis of outsourcing more complicated.