Outsourcing versus Integration at Home or Abroad
AbstractUsing data on a sample of Italian manufacturing companies, this paper analyzes the location (at home or abroad) and the mode of organization (outsourcing versus integration) of intermediate inputs production. We find evidence of a productivity ordering (largely consistent with the assumptions in AntrÃ s and Helpman 2004) where foreign integration is chosen by the most productive and domestic outsourcing by the least productive firms; those with medium-high productivity choose domestic integration, those with medium-low productivity foreign outsourcing. We also find that the preference for integration over outsourcing is positively related to some indicators of headquarter intensity, notably capital intensity, as predicted by AntrÃ s (2003) and AntrÃ s and Helpman (2004).
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Bibliographic InfoPaper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 742.
Date of creation: Feb 2010
Date of revision:
international outsourcing; foreign direct investment; intra-firm trade; productivity;
Find related papers by JEL classification:
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-03-20 (All new papers)
- NEP-BEC-2010-03-20 (Business Economics)
- NEP-COM-2010-03-20 (Industrial Competition)
- NEP-EFF-2010-03-20 (Efficiency & Productivity)
- NEP-INT-2010-03-20 (International Trade)
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