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What Drives (or Hampers) Outsourcing? Evidence for a Local Production System in Emilia Romagna

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  • Massimiliano Mazzanti
  • Sandro Montresor
  • Paolo Pini

Abstract

The paper investigates the drivers of the outsourcing decisions of firms located in a specific local production system. Different kinds of drivers are considered drawing on different strands of the literature, considering the firm from an organizational point of view, and as a production, industrial and innovation unit of analysis. Theoretical correlations between outsourcing decisions and variables are formulated and tested with respect to a representative cross-section sample of the firms in Reggio Emilia, a local production system in Emilia Romagna. The main result of the paper is that, in the local context investigated, transaction costs do not seem to be a significant driver of outsourcing. The decision to externalize is rather driven by other arguments, strongly based on the resource-competence approach, factors such as the need for tapping into the providers to promote technological innovation. On the other hand, these drivers are contrasted by the industrial relations of the firms, as workers and workers' representatives significantly hamper it, possibly fearing job losses, or at most expect to be involved in the relative decision in order to make it possible or even spur it. These results have important implications, both at the research level—at which they suggest to complement the transaction cost analysis of outsourcing with that of other approaches—and at the management level—at which they support the thesis that external organizational innovations, such as outsourcing, cannot neglect internal organizational aspects, such as human resource management and industrial relations.

Suggested Citation

  • Massimiliano Mazzanti & Sandro Montresor & Paolo Pini, 2009. "What Drives (or Hampers) Outsourcing? Evidence for a Local Production System in Emilia Romagna," Industry and Innovation, Taylor & Francis Journals, vol. 16(3), pages 331-365.
  • Handle: RePEc:taf:indinn:v:16:y:2009:i:3:p:331-365 DOI: 10.1080/13662710902923909
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Andræs Barge-Gil, 2013. "Open Strategies and Innovation Performance," Industry and Innovation, Taylor & Francis Journals, pages 585-610.
    2. Roberto Antonietti, 2016. "From outsourcing to productivity, passing through training: microeconometric evidence from Italy," Industry and Innovation, Taylor & Francis Journals, pages 407-425.
    3. Bernhard Dachs & Bernd Ebersberger & Steffen Kinkel & Oliver Som, 2015. "The effects of production offshoring on R&D and innovation in the home country," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(1), pages 9-31, March.
    4. Charlie Karlsson & Urban Gråsjö & Sofia Wixe (ed.), 2015. "Innovation and Entrepreneurship in the Global Economy," Books, Edward Elgar Publishing, number 15906, April.
    5. Spithoven, André & Teirlinck, Peter, 2015. "Internal capabilities, network resources and appropriation mechanisms as determinants of R&D outsourcing," Research Policy, Elsevier, vol. 44(3), pages 711-725.
    6. Andræs Barge-Gil, 2013. "Open Strategies and Innovation Performance," Industry and Innovation, Taylor & Francis Journals, pages 585-610.
    7. Anna Maria Ferragina & Fernanda Mazzotta, 2014. "Agglomeration economies and global activities: impact on firm survival," ERSA conference papers ersa14p348, European Regional Science Association.
    8. Leoncini, Riccardo & Montresor, Sandro & Rentocchini, Francesco, 2016. "CO2-reducing innovations and outsourcing: Evidence from photovoltaics and green construction in North-East Italy," Research Policy, Elsevier, vol. 45(8), pages 1649-1659.
    9. Roberto Antonietti & Maria Rosaria Ferrante & Riccardo Leoncini, 2016. "Local market size, social capital and outsourcing: evidence from Emilia Romagna," Small Business Economics, Springer, vol. 47(1), pages 243-260, June.
    10. Roberto Antonietti, 2016. "From outsourcing to productivity, passing through training: microeconometric evidence from Italy," Industry and Innovation, Taylor & Francis Journals, pages 407-425.
    11. Danielle Galliano & Luis Orozco, 2013. "New Technologies and Firm Organization: The Case of Electronic Traceability Systems in French Agribusiness," Industry and Innovation, Taylor & Francis Journals, pages 22-47.
    12. Roberto Antonietti & Maria Rosaria Ferrante & Riccardo Leoncini, 2014. "Trust your neighbour. Industrial relatedness, social capital and outsourcing," Papers in Evolutionary Economic Geography (PEEG) 1403, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Jan 2014.
    13. Antonio Revilla & Zulima Fernández, 2013. "Environmental Dynamism, Firm Size and the Economic Productivity of R&D," Industry and Innovation, Taylor & Francis Journals, pages 503-522.
    14. Danielle Galliano & Luis Orozco, 2013. "New Technologies and Firm Organization: The Case of Electronic Traceability Systems in French Agribusiness," Industry and Innovation, Taylor & Francis Journals, pages 22-47.
    15. Roberto Antonietti & Maria Rosaria Ferrante & Riccardo Leoncini, 2015. "Infrastructure endowment, social capital and outsourcing: evidence from Emilia Romagna, Italy," Chapters,in: Innovation and Entrepreneurship in the Global Economy, chapter 13, pages 310-330 Edward Elgar Publishing.

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