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Subcontracting dynamics and economic development: A study on textile and engineering industries


  • Erol Taymaz

    () (Department of Economics, METU)

  • Yilmaz Kilicaslan

    () (Department of Economics, METU)


Recent studies on small and medium sized establishments emphasize the importance of networking and regional clusters for industrial development. This study is focused on an important form of cooperation between firms: subcontracting relationship. Our aim is to estimate the determinants of subcontracting in Turkish textile and engineering industries, and to derive policy implications of our estimates. We estimate subcontract offering and subcontract receiving models for both industries by using panel data on all establishments employing 25 or more workers in the period 1988-97. Our findings show that short-term/unequal relationship exists between parent firms and subcontractors in the textile industry whereas subcontracting relationships in the engineering industry are established between "similar", relatively advanced firms that have complementary assets and technologies.

Suggested Citation

  • Erol Taymaz & Yilmaz Kilicaslan, 2001. "Subcontracting dynamics and economic development: A study on textile and engineering industries," ERC Working Papers 0108, ERC - Economic Research Center, Middle East Technical University, revised Aug 2001.
  • Handle: RePEc:met:wpaper:0108

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    References listed on IDEAS

    1. Yossef Spiegel, 1993. "Horizontal Subcontracting," RAND Journal of Economics, The RAND Corporation, vol. 24(4), pages 570-590, Winter.
    2. A E Clarke, 1994. "Spatial Linkages and Subcontracting Relationships among High-Technology Industries in the Northeast Ohio Region," Environment and Planning A, , vol. 26(10), pages 1579-1603, October.
    3. Gonzalez-Diaz, Manuel & Arrunada, Benito & Fernandez, Alberto, 2000. "Causes of subcontracting: evidence from panel data on construction firms," Journal of Economic Behavior & Organization, Elsevier, vol. 42(2), pages 167-187, June.
    4. Christerson, Brad & Appelbaum, Richard P., 1995. "Global and local subcontracting: Space, ethnicity, and the organization of apparel production," World Development, Elsevier, vol. 23(8), pages 1363-1374, August.
    5. A E Clarke, 1994. "Spatial linkages and subcontracting relationships among high-technology industries in the Northeast Ohio region," Environment and Planning A, Pion Ltd, London, vol. 26(10), pages 1579-1603, October.
    6. Richard Arena & Joël-Thomas Ravix & P.M Romani, 1992. "Firm, coopération and subcontracting," Post-Print halshs-00469059, HAL.
    7. Belderbos, Rene & Capannelli, Giovanni & Fukao, Kyoji, 2001. "Backward Vertical Linkages of Foreign Manufacturing Affiliates: Evidence from Japanese Multinationals," World Development, Elsevier, vol. 29(1), pages 189-208, January.
    8. Kelley, Maryellen R. & Harrison, Bennett, 1990. "The subcontracting behavior of single vs. multiplant enterprises in US manufacturing: Implications for economic development," World Development, Elsevier, vol. 18(9), pages 1273-1294, September.
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    Cited by:

    1. Sanda Renko & Alica Grilec Kauric & Mario Lesina, 2014. "Dealing With Crisis: Using Subcontracting For The Development Of The Croatian Leather Manufacturing And Processing Industry," Interdisciplinary Management Research, Josip Juraj Strossmayer University of Osijek, Faculty of Economics, Croatia, vol. 10, pages 463-474.
    2. Joaquín Andaluz, 2008. "Vertical product differentiation with subcontracting," Documentos de Trabajo dt2008-01, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.

    More about this item


    Subcontracting; firm cooperation; vertical integration;

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L61 - Industrial Organization - - Industry Studies: Manufacturing - - - Metals and Metal Products; Cement; Glass; Ceramics
    • L67 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Consumer Nondurables: Clothing, Textiles, Shoes, and Leather Goods; Household Goods; Sports Equipment


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