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Production to Order and Performance in Domestic and Foreign Markets

Listed author(s):
  • Razzolini Tiziano
  • Vannoni Davide

This paper contributes to the literature on firms' productivity and exporting decisions by analyzing the role played by organizational choice aspects. Rather than setting up a vertically integrated structure, manufacturers may act as sub-contractors in both domestic and foreign markets, and produce to satisfy the requirements of other firms. The predictions that the most productive firms self-select into exporting, while the least productive ones work as sub-contractors serving the domestic market only are tested on a sample of Italian firms observed in the 1998-2003 period. The results of our estimates highlight a ranking of firms consistent with the prediction of a "stylized" theoretical model, and provide a clear indication that firms using sub-contracting in foreign markets display lower TFP values as compared to "direct exporters".

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Article provided by Società editrice il Mulino in its journal L'industria.

Volume (Year): (2009)
Issue (Month): 3 ()
Pages: 437-466

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Handle: RePEc:mul:j0hje1:doi:10.1430/30003:y:2009:i:3:p:437-466
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