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Production to Order and Performance in Domestic and Foreign Markets

Author

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  • Tiziano Razzolini
  • Davide Vannoni

Abstract

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".

Suggested Citation

  • Tiziano Razzolini & Davide Vannoni, 2009. "Production to Order and Performance in Domestic and Foreign Markets," L'industria, Società editrice il Mulino, issue 3, pages 437-466.
  • Handle: RePEc:mul:j0hje1:doi:10.1430/30003:y:2009:i:3:p:437-466
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    Cited by:

    1. Antonio Accetturo & Anna Giunta & Salvatore Rossi, 2011. "The Italian Firms between Crisis and the new Globalization," L'industria, Società editrice il Mulino, issue 1, pages 145-164.
    2. Valeria Gattai, 2015. "Internationalisation and performance at the firm-level: what we learn from Italy," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(4), pages 475-509, December.

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