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Outsourcing versus Integration at Home or Abroad

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  • Stefano Federico

    ()
    (Bank of Italy, Economics and International Relations)

Abstract

Using 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 Antràs 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 Antràs (2003) and Antràs and Helpman (2004).

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Bibliographic Info

Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 742.

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Date of creation: Feb 2010
Date of revision:
Handle: RePEc:bdi:wptemi:td_742_10

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Related research

Keywords: international outsourcing; foreign direct investment; intra-firm trade; productivity;

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Cited by:
  1. Schwarz, Christian & Suedekum, Jens, 2013. "Global sourcing of complex production processes," DICE Discussion Papers 125, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  2. Schwarz, Christian & Suedekum, Jens, 2014. "Global sourcing of complex production processes," Journal of International Economics, Elsevier, vol. 93(1), pages 123-139.
  3. Verena Nowak & Christian Schwarz & Jens Suedekum, 2012. "On the Organizational Structure of Multinational Firms - Which Sourcing Mode for which Input?," CESifo Working Paper Series 3823, CESifo Group Munich.
  4. Accetturo Antonio & Giunta Anna & Rossi Salvatore, 2011. "The Italian Firms between Crisis and the new Globalization," L'industria, Società editrice il Mulino, issue 1, pages 145-164.
  5. Fabio Pieri & Enrico Zaninotto, 2013. "Vertical integration and efficiency: an application to the Italian machine tool industry," Small Business Economics, Springer, vol. 40(2), pages 397-416, February.
  6. Kohler, Wilhelm & Smolka, Marcel, 2013. "Global Sourcing: Towards an Empirical Test of the Hold-up Model," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80049, Verein für Socialpolitik / German Economic Association.
  7. Kohler, Wilhelm & Smolka, Marcel, 2013. "Global sourcing and firm selection," University of Tuebingen Working Papers in Economics and Finance 63, University of Tuebingen, Faculty of Economics and Social Sciences.
  8. Giorgio D'Agostino & Margherita Scarlato, 2011. "Innovation, Growth and Quality of Life: a Theoretical Model and an Estimate for the Italian Regions," Departmental Working Papers of Economics - University 'Roma Tre' 0138, Department of Economics - University Roma Tre.
  9. Franco Amatori & Matteo Bugamelli & Andrea Colli, 2011. "Italian Firms in History: Size, Technology and Entrepreneurship," Quaderni di storia economica (Economic History Working Papers) 13, Bank of Italy, Economic Research and International Relations Area.

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