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Headquarter intensity and the choice between outsourcing versus integration at home or abroad

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  • Stefano Federico

Abstract

This article provides an empirical analysis of the choice between outsourcing and integration, with a distinction based on whether production is carried out at home or abroad. Using firm-level data for Italy, we find that the preference for integration over outsourcing is positively related to indicators of headquarter intensity, notably capital intensity, and to firm-level productivity. We also find that foreign sourcing strategies are not independent from domestic sourcing strategies. Overall, the evidence provides support to models based on relationship-specific investments. Copyright 2012 The Author 2012. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.

Suggested Citation

  • Stefano Federico, 2012. "Headquarter intensity and the choice between outsourcing versus integration at home or abroad," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 21(6), pages 1337-1358, December.
    • Handle: RePEc:oup:indcch:v:21:y:2012:i:6:p:1337-1358
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    Cited by:

    1. Kohler, Wilhelm & Smolka, Marcel, 2013. "Global Sourcing: Towards an Empirical Test of the Hold-up Model," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80049, Verein für Socialpolitik / German Economic Association.
    2. Accetturo, Antonio & Giunta, Anna, 2018. "Value chains and the great recession: Evidence from Italian and German firms," International Economics, Elsevier, vol. 153(C), pages 55-68.
    3. Kohler, Wilhelm & Smolka, Marcel, 2014. "Global sourcing and firm selection," Economics Letters, Elsevier, vol. 124(3), pages 411-415.
    4. Koch, Andreas & Brändle, Tobias, 2013. "Outsourcing Potentials and International Tradability of Jobs. Evidence from German Micro-Level Data," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79727, Verein für Socialpolitik / German Economic Association.
    5. Tobias Brändle, 2015. "Is offshoring linked to offshoring potential? Evidence from German linked employer–employee data," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 151(4), pages 735-766, November.
    6. Angels Pelegrín & José García-Quevedo, 2012. "Which firms are involved in foreign vertical integration?," Working Papers 2012/38, Institut d'Economia de Barcelona (IEB).
    7. Alessandro Manello & Giuseppe Calabrese & Piercarlo Frigero, "undated". "Explaining the efficiency of Italian car suppliers during the crisis," CERIS Working Paper 201406, CNR-IRCrES Research Institute on Sustainable Economic Growth - Torino (TO) ITALY - former Institute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY.
    8. Kohler, Wilhelm & Smolka, Marcel, 2021. "Productivity and firm boundaries," European Economic Review, Elsevier, vol. 135(C).
    9. Tobias Brändle & Andreas Koch, 2017. "Offshoring and Outsourcing Potentials: Evidence from German Micro-Level Data," The World Economy, Wiley Blackwell, vol. 40(9), pages 1775-1806, September.
    10. Giorgia Giovannetti & Enrico Marvasi & Marco Sanfilippo, 2013. "Supply Chains and the Internalization of SMEs: Evidence from Italy," Working Papers - Economics wp2013_30.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    11. Valeria Gattai & Valentina Trovato, 2014. "Estimating sourcing premia with Italian regional data," Working Papers 276, University of Milano-Bicocca, Department of Economics, revised Jun 2014.
    12. Giorgia Giovannetti & Enrico Marvasi & Marco Sanfilippo, 2015. "Supply chains and the internationalization of small firms," Small Business Economics, Springer, vol. 44(4), pages 845-865, April.
    13. Tobias Brändle & Andreas Koch, 2015. "Offshoreability and wages. Evidence from German task data," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(2), pages 189-216, June.
    14. Angels Pelegrín & José García-Quevedo, 2012. "Which firms are involved in foreign vertical integration?," Working Papers 2012/38, Institut d'Economia de Barcelona (IEB).
    15. Gattai Valeria & Trovato Valentina, 2016. "Estimating Sourcing Premia Using Italian Regional Data," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(2), pages 1029-1067, April.
    16. Giorgia Giovannetti & Enrico Marvasi & Giorgio Ricchiuti, 2019. "Does the Same FDI Fit All? How Competition and Affiliates Characteristics Affect Parents’ Productivity," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 5(3), pages 369-402, October.
    17. Smolka, Marcel & Kohler, Wilhelm, 2015. "Global Sourcing of Heterogeneous Firms: Theory and Evidence," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113012, Verein für Socialpolitik / German Economic Association.

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