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The Organization of Global Supply Networks

Author

Listed:
  • Loredana Fattorini

    (IMT School for Advanced Studies Lucca)

  • Armando Rungi

    (IMT School for Advanced Studies Lucca)

  • Zhen Zhu

    (IMT School for Advanced Studies Lucca)

Abstract

In this contribution, we introduce a network approach for the organization of global production across national borders, beyond the sequential industry-level metrics proposed in the previous literature. First, we show and argue that several characteristics of global production processes would be lost in the analysis when assuming that they could be proxied as linear sequences. Hence, we propose an index that assesses the relevance of any input for the target output, including its role as an input of inputs. Thereafter, we exploit an own-built firm-level dataset of about 20,489 U.S. parent companies integrating more than 154,000 affiliates worldwide. Results show that the technological relevance of an input in a directed supply network is also a good predictor for: i) the probability that an input industry is actually integrated within a firm boundary; ii) the number of affiliates that are controlled by the parent company and active in that input industry.

Suggested Citation

  • Loredana Fattorini & Armando Rungi & Zhen Zhu, 2017. "The Organization of Global Supply Networks," Working Papers 08/2017, IMT School for Advanced Studies Lucca, revised Nov 2017.
  • Handle: RePEc:ial:wpaper:8/2017
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    global value chains; supply networks; vertical integration; upstreamness; firm theory;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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