Pervasive outsourcing is transforming business models and productive relations in advanced manufacturing areas. In particular, the international dimension of outsourcing, off-shoring, has been attracting great attention, as it leads to the emergence of global value chains and internationally distributed innovation processes, affecting the position of regions and countries in the international division of labour. The present paper investigates the diversified patterns of outsourcing and off-shoring across industries which have been characterising the recent dynamics of Lombardy, the Italian leading economic region. Based on a large firm-level survey, the work investigates extent, depth, regional embeddedness and degree of internationalisation of outsourcing processes, differentiating between stages of production, research and service activities. The evidence suggests that fragmentation is remarkably wide and interests all the industrial sectors to a similar extent. However, outsourcing has a clear regional dimension, concerning services at most, and taking the form of extended producer-driven chains, highly embedded in the regional system. Regionally confined fragmentation is driven by final producers of relatively small size, which nevertheless exhibit high skill intensity. Off-shoring is still, on the other hand, a limited phenomenon, encompassing only a minor fraction of the process of deverticalisation. The evidence depicts off-shoring as part of a wider process of internationalisation by mostly large firms or group subsidiaries at intermediate stages of the value chain, which increasingly rely on international intra-industry trade. The international outsourcing trend appears to be strongly driven by export-oriented firms, whereas foreign direct investment per se seems to play a minor role.
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Paper provided by CESPRI, Centre for Research on Innovation and Internationalisation, Universita' Bocconi, Milano, Italy in its series CESPRI Working Papers with number
194.
Length: pages 30 Date of creation: Dec 2006 Date of revision:
Dec 2006 Handle: RePEc:cri:cespri:wp194
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Find related papers by JEL classification: D21 - Microeconomics - - Production and Organizations - - - Firm Behavior 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 L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production O32 - Economic Development, Technological Change, and Growth - - Technological Change - - - Management of Technological Innovation and R&D
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