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'Make-or-Buy' of Peripheral Services in Manufacturing: Evidence from Spanish Plant-Level Data

Author

Listed:
  • Bayo-Moriones, Alberto

    (University of Navarra)

  • Galdon-Sanchez, Jose Enrique

    (Universidad Pública de Navarra)

  • Gil, Ricard

    (Johns Hopkins University)

Abstract

In this paper we empirically explore the 'make-or-buy' decisions of peripheral services in manufacturing plants using detailed information on a data set from a new plant-level survey from 926 plants distributed in all manufacturing industries in Spain. In particular, survey respondents are asked how their contracting practices of peripheral services had changed in the last three years. The answer to this question is informative of the changes in the importance of backward integration for each of the plants interviewed. Using other information provided in the survey, we relate reported changes in backward integration to changes in other relevant plant characteristics. We show that increases in outsourcing of services are positively correlated with increases in the plant's market share as well as increases in product market competition and product prices. These findings are robust to controlling for whether plants belong to single-plant or multi-plant firms. This result is consistent with the view that market size limits the degree of specialization at the plant level in the Spanish manufacturing industry.

Suggested Citation

  • Bayo-Moriones, Alberto & Galdon-Sanchez, Jose Enrique & Gil, Ricard, 2013. "'Make-or-Buy' of Peripheral Services in Manufacturing: Evidence from Spanish Plant-Level Data," IZA Discussion Papers 7138, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp7138
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    Cited by:

    1. Christian Ruzzier & Ricard Gil, 2015. "’Make or Buy’ as Competitive Strategy: Evidence from the Spanish Local TV Industry," Working Papers 119, Universidad de San Andres, Departamento de Economia, revised Feb 2015.

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    More about this item

    Keywords

    make-or-buy; peripheral services; manufacturing; market share; competition; outsourcing;
    All these keywords.

    JEL classification:

    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • J29 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Other
    • J59 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Other

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