Production Outsourcing, Organizational Governance and Firm’s Technological Performance: Evidence from Italy
AbstractAim of this paper is to study whether and how the firm’s decision to outsource production activities affects its technological performance. In particular, we look at how the alignment between the firm’s governance strategy and the underlying attributes of the transactions affects the capacity of the firm to introduce new products and processes. Using microeconomic data on a repeated cross-section of Italian manufacturing firms for the period 1998-2003, we develop a two-stage approach: first, we estimate the determinants of the firm’s organizational governance (production outsourcing); second, we incorporate a measure of governance misalignment into a technological performance relation. We find (i) that firms not aligned with the optimal organizational governance perform less well in terms of process innovation than more aligned competitors, but (ii) that misalignment has a positive effect on product innovation. However, this counterintuitive result is strongly characterized by non-linear effects that reverse the latter correlation for high values of governance misfit.
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Bibliographic InfoPaper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2007.58.
Date of creation: May 2007
Date of revision:
Production Outsourcing; Organizational Governance; Misalignment; Technological Performance; Non-Linearity;
Other versions of this item:
- Roberto Antonietti & Giulio Cainelli, 2008. "Production Outsourcing, Organizational Governance and Firm’s Technological Performance: Evidence from Italy," The IUP Journal of Managerial Economics, IUP Publications, vol. 0(1), pages 51-69, February.
- L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
- L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-07-07 (All new papers)
- NEP-BEC-2007-07-07 (Business Economics)
- NEP-CSE-2007-07-07 (Economics of Strategic Management)
- NEP-EFF-2007-07-07 (Efficiency & Productivity)
- NEP-INO-2007-07-07 (Innovation)
- NEP-TID-2007-07-07 (Technology & Industrial Dynamics)
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