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Spatial Agglomeration, Technology and Outsourcing of Knowledge Intensive Business Services Empirical Insights from Italy

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Author Info
Roberto Antonietti (University of Bologna)
Giulio Cainelli (University of Bari and CERIS-CNR)

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Abstract

Aim of this paper is to explore the main drivers of outsourcing of knowledge intensive business services by Italian manufacturing firms. While anecdotal and empirical evidence has emphasized labour cost and scale economies as behind firms’ choices to outsource production or service activities, here we focus on spatial agglomeration and technology as important factors. Using microeconomic data on a repeated cross-section of Italian manufacturing firms for the period 1998-2003, we develop a two-stage model in order to avoid selection bias: first, we estimate the determinants of the firm's decision to outsource business-related services; second, we estimate the main factors underlying the intensity and complexity of KIBS outsourcing, expressed by the number of service activities that are externalized. Our results show that labour cost-savings are not relevant in driving the decision to outsource KIBS, but ICT, R&D and location within a dense and technologically developed industrial district have very positive effects.

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Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2007.79.

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Date of creation: Jul 2007
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Handle: RePEc:fem:femwpa:2007.79

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Related research
Keywords: KIBS Service Outsourcing R&D ICT Spatial Agglomeration

Find related papers by JEL classification:
L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
L84 - Industrial Organization - - Industry Studies: Services - - - Personal, Professional, and Business Services
R32 - Urban, Rural, and Regional Economics - - Production Analysis and Firm Location - - - Other Production and Pricing Analysis
R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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References listed on IDEAS
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    Other versions:
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    Other versions:
  4. Raffaello Bronzini, 2004. "Foreign Direct Investment and Agglomeration: Evidence from Italy," ERSA conference papers ersa04p321, European Regional Science Association. [Downloadable!]
  5. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January. [Downloadable!] (restricted)
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    • Edward L. Glaeser & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1991. "Growth in Cities," NBER Working Papers 3787, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  9. Gene M. Grossman & Esteban Rossi-Hansberg, 2006. "Trading Tasks: A Simple Theory of Offshoring," NBER Working Papers 12721, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Raffaello Bronzini, 2004. "Foreign direct investment and agglomeration: evidence from Italy," Temi di discussione (Economic working papers) 526, Bank of Italy, Economic Research Department. [Downloadable!]
  11. Ottati, Gabi Dei, 1994. "Trust, Interlinking Transactions and Credit in the Industrial District," Cambridge Journal of Economics, Oxford University Press, vol. 18(6), pages 529-46, December.
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  13. Görg, Holger & Hanley, Aoife, 2004. "Does Outsourcing Increase Profitability?," IZA Discussion Papers 1372, Institute for the Study of Labor (IZA). [Downloadable!]
  14. Mary Amiti & Shang-Jin Wei, 2004. "Fear of Service Outsourcing: Is it Justified?," IMF Working Papers 04/186, International Monetary Fund. [Downloadable!]
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  15. Stefano Federico, 2006. "The internationalization of Italian production and industrial districts: an analysis of direct investment abroad," Temi di discussione (Economic working papers) 592, Bank of Italy, Economic Research Department. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Paul L. Robertson & David Jacobson & Richard N. Langlois, 2008. "Innovation Processes and Industrial Districts," Working papers 2008-03, University of Connecticut, Department of Economics. [Downloadable!]
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