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Innovation and the geographical and functional dimensions of outsourcing: An empirical investigation based on Italian firm level data

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Author Info

  • Lucia Cusmano

    (Insubria University, Varese and CESPRI - Bocconi University, Milan, Italy.)

  • Maria Luisa Mancusi

    (CESPRI - Bocconi University, Milan, Italy.)

  • Andrea Morrison

    (URU - Utrecht University, Utrecht, The Netherlands and CESPRI - Bocconi University, Milan, Italy)

Abstract

The paper investigates the diversified patterns of outsourcing in the Lombardy region and relates them to the probability of introducing product and process innovation. Based on a large firm-level survey, we show that outsourcing processes are strongly regionally embedded and that offshoring is still a limited phenomenon. Outsourcing strategies are shown to have a positive impact on firms’ innovation. In particular, the outsourcing of service activities contributes the most to innovation, thus suggesting that firms successfully pursue core strengthening strategies. Our econometric estimates show that both geographical and organizational proximity matter. Indeed, the positive association of services with innovation is strongly related to their regional dimension, which points toward the importance of local user-producer relationships. When outsourcing crosses national borders, keeping the outsourced activities at least loosely connected to the firm appears critical, as offshoring to non affiliated firms has a clear negative impact on innovation.

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File URL: ftp://ftp.unibocconi.it/pub/RePEc/cri/papers/WP210CusmanoMancusiMorrison.pdf
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Bibliographic Info

Paper provided by KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy in its series KITeS Working Papers with number 210.

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Length: pages 24
Date of creation: Dec 2007
Date of revision: Dec 2007
Handle: RePEc:cri:cespri:wp210

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Keywords: Product Innovation; Process Innovation; Outsourcing; Offshoring.;

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