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Globalisation of production and innovation: how outsourcing is reshaping an advanced manufacturing area

  • Lucia Cusmano

    (CESPRI – Bocconi University, Milano, Italy and Insubria University, Varese, Italy)

  • Maria Luisa Mancusi

    (Bocconi University, Milan, Italy.)

  • Andrea Morrison

    (Università del Piemonte Orientale, Novara, Italy.)

Pervasive outsourcing is transforming business models and productive relations in advanced manufacturing areas. In particular, the international dimension of outsourcing, off-shoring, has been attracting great attention, as it leads to the emergence of global value chains and internationally distributed innovation processes, affecting the position of regions and countries in the international division of labour. The present paper investigates the diversified patterns of outsourcing and off-shoring across industries which have been characterising the recent dynamics of Lombardy, the Italian leading economic region. Based on a large firm-level survey, the work investigates extent, depth, regional embeddedness and degree of internationalisation of outsourcing processes, differentiating between stages of production, research and service activities. The evidence suggests that fragmentation is remarkably wide and interests all the industrial sectors to a similar extent. However, outsourcing has a clear regional dimension, concerning services at most, and taking the form of extended producer-driven chains, highly embedded in the regional system. Regionally confined fragmentation is driven by final producers of relatively small size, which nevertheless exhibit high skill intensity. Off-shoring is still, on the other hand, a limited phenomenon, encompassing only a minor fraction of the process of deverticalisation. The evidence depicts off-shoring as part of a wider process of internationalisation by mostly large firms or group subsidiaries at intermediate stages of the value chain, which increasingly rely on international intra-industry trade. The international outsourcing trend appears to be strongly driven by export-oriented firms, whereas foreign direct investment per se seems to play a minor role.

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File URL: ftp://ftp.unibocconi.it/pub/RePEc/cri/papers/WP194CusmanoMancusiMorrison.pdf
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Paper provided by KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy in its series KITeS Working Papers with number 194.

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Length: pages 30
Date of creation: Dec 2006
Date of revision: Dec 2006
Handle: RePEc:cri:cespri:wp194
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  1. Katharine G. Abraham & Susan K. Taylor, 1993. "Firms' Use of Outside Contractors: Theory and Evidence," NBER Working Papers 4468, National Bureau of Economic Research, Inc.
  2. Ron Boschma, 2004. "Competitiveness of Regions from an Evolutionary Perspective," Regional Studies, Taylor & Francis Journals, vol. 38(9), pages 1001-1014.
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