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Outsourcing, Delocalization and Firm Organization: Transaction Costs vs. Industrial Relations in a Local Production System of Emilia-Romagna


  • Massimiliano Mazzanti
  • Sandro Montresor
  • Paolo Pini


The paper aims at investigating how far transaction costs economics (TCE) concurs in the explanation of outsourcing decisions in firms characterized by “thick’ industrial relations, that is where unions and employees are involved in, and are sometimes able to affect, the relative managerial decisions through participatory formal and informal mechanisms. What is more, the paper aims at investigating whether the concurrence of TCE and industrial relationships has different outsourcing implications for firms which are also involved in delocalization strategies. An empirical model, translating a set of theoretical correlations between an original outsourcing extent variable, on the one hand, and a number of proxies related to TCE, industrial relations and delocalization, on the other hand, is applied to a representative sample of manufacturing firms for the local production system of Reggio Emilia (RE) (in Northern Italy). Overall, the empirical application shows that the role of TCE in accounting for outsourcing in the LPS of RE is quite blurred, if not even contradicted, while the role of industrial relations emerges instead quite straightforwardly. Finally, RE firms generally use outsourcing and international delocalization in a complementary way, but the correlation between outsourcing and delocalization turns out to be dependent on the kind of activity and of the nature of the delocalization channel.

Suggested Citation

  • Massimiliano Mazzanti & Sandro Montresor & Paolo Pini, 2008. "Outsourcing, Delocalization and Firm Organization: Transaction Costs vs. Industrial Relations in a Local Production System of Emilia-Romagna," DRUID Working Papers 08-08, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  • Handle: RePEc:aal:abbswp:08-08

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    Cited by:

    1. Martin Mathews & Peter Stokes, 2013. "The creation of trust: the interplay of rationality, institutions and exchange," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 25(9-10), pages 845-866, December.
    2. Alessandro Bramucci & Antonello Zanfei, 2015. "The governance of offshoring and its effects at home. The role of codetermination in the international organization of German firms," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(2), pages 217-244, June.

    More about this item


    Outsourcing; firm organization; transaction costs; competences; innovation; local production systems;

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence


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