Urban size and KIBS vertical disintegration: Evidence from Lombardy
A recent strand of the economic literature has emphasised the role of services, and in particular knowledge-intensive business services (KIBS), as a primary source of knowledge creation and diffusion. Since this transferring process often occurs through strong face-to-face interactions, the role of spatial proximity becomes crucial. Theoretical and empirical literature show that the geographic concentration of industry induces firms to vertically disintegrate their production, due to the lowering of transport and governance costs as well as to the reduction of opportunism in managing transactions. However, the evidence is primarily based on manufacturing firms, whereas little or no attention is given to service firms. In this paper we try to fill this gap by estimating the effects of urban agglomeration on knowledge intensive business service firmsÃ¢â‚¬â„¢ vertical disintegration in a longitudinal context, with reference to the Lombardy region in Italy. Data used in this work are drawn from AIDA, a commercial database collected by Bureau Van Dijck gathering information on balance sheets data as well as the geographical position of Italian joint stock companies. Relying on this rich firm-level dataset, we build a sample of almost 17.000 KIBS firms located in Lombardy over the period 2004-2009, and we estimate both a first difference and an instrumental variable GMM model in which, as dependent variable, we use both the share of purchased business services and the share of material inputs, while, as explanatory variables, we include firm size, age and population size at the municipality and local labour system level. In so doing, we estimate the impact that the short-run variations in urban size have on the short-run variations in the degree of vertical disintegration of KIBS, while controlling for potential endogeneity issues due to unobserved heterogeneity and simultaneity, and for the robustness of our measure of urban size to alternative specifications. Our results complement previous cross-sectional evidence and point to a positive and statistically significant effect of urban size on the degree of vertical disintegration. In addition, we find that this effect is particularly strong for professional KIBS and for the purchase of business services rather than for technological KIBS and for the purchase of material inputs. Keywords: agglomeration, KIBS, urban size, vertical disintegration JEL: C33; D22; R12; L24
|Date of creation:||Oct 2012|
|Date of revision:|
|Contact details of provider:|| Postal: Welthandelsplatz 1, 1020 Vienna, Austria|
Web page: http://www.ersa.org
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- repec:spo:wpecon:info:hdl:2441/c8dmi8nm4pdjkuc9g8mc6ihim is not listed on IDEAS
- Ruthrama Rama & Deron Ferguson & Ana Melero, 2003. "Subcontracting Networks in Industrial Districts: The Electronics Industries of Madrid," Regional Studies, Taylor & Francis Journals, vol. 37(1), pages 71-88.
- Marina Doroshenko & Ian Miles & Dmitry Vinogradov, 2014.
"Knowledge Intensive business services: the Russian experience,"
CyberLeninka;Федеральное государственное автономное образовательное учреждение высшего образования «Национальный исследовательский университет «Высшая школа экономики», vol. 8(4 (eng)), pages 24-39.
- Marina Doroshenko & Ian Miles & Dmitry Vinogradov, 2014. "Knowledge Intensive Business Services: The Russian Experience," Foresight-Russia, National Research University Higher School of Economics, vol. 8(4), pages 24-39.
- Giulio Cainelli & Donato Iacobucci, 2011.
"Agglomeration, related variety and vertical integration,"
Openloc Working Papers
1104, Public policies and local development.
- Giulio Cainelli & Donato Iacobucci, 2012. "Agglomeration, Related Variety, and Vertical Integration," Economic Geography, Clark University, vol. 88(3), pages 255-277, 07.
- Giulio Cainelli & Donato Iacobucci, 2010. "Agglomeration, related variety and vertical integration," Working Papers 1005, c.MET-05 - Centro Interuniversitario di Economia Applicata alle Politiche per L'industria, lo Sviluppo locale e l'Internazionalizzazione.
- Philippe Martin & Thierry Mayer & Florian Mayneris, 2011.
"Spatial concentration and plant-level productivity in france,"
- Martin, Philippe & Mayer, Thierry & Mayneris, Florian, 2011. "Spatial concentration and plant-level productivity in France," Journal of Urban Economics, Elsevier, vol. 69(2), pages 182-195, March.
- Philippe Martin & Thierry Mayer & Florian Mayneris, 2011. "Spatial concentration and plant-level productivity in france," Sciences Po publications info:hdl:2441/c8dmi8nm4pd, Sciences Po.
- MARTIN, Philippe & MAYER, Thierry & MAYNERIS, Florian, . "Spatial concentration and plant-level productivity in France," CORE Discussion Papers RP 2273, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- George J. Stigler, 1951. "The Division of Labor is Limited by the Extent of the Market," Journal of Political Economy, University of Chicago Press, vol. 59, pages 185.
- Roberto Antonietti & Giulio Cainelli, 2007. "Spatial Agglomeration, Technology and Outsourcing of Knowledge Intensive Business Services Empirical Insights from Italy," Working Papers 2007.79, Fondazione Eni Enrico Mattei.
- Simone Strambach, 2010. "Knowledge-Intensive Business Services (KIBS)," Chapters, in: Platforms of Innovation, chapter 7 Edward Elgar Publishing.
- Li, Ben & Lu, Yi, 2009. "Geographic concentration and vertical disintegration: Evidence from China," Journal of Urban Economics, Elsevier, vol. 65(3), pages 294-304, May.
- Helsley, Robert W. & Strange, William C., 2007. "Agglomeration, opportunism, and the organization of production," Journal of Urban Economics, Elsevier, vol. 62(1), pages 55-75, July.
- J. Vernon Henderson & Mohammad Arzaghi, 2005.
"Networking Off Madison Avenue,"
05-15, Center for Economic Studies, U.S. Census Bureau.
- Muller, Emmanuel & Zenker, Andrea, 2001. "Business services as actors of knowledge transformation: the role of KIBS in regional and national innovation systems," Research Policy, Elsevier, vol. 30(9), pages 1501-1516, December.
- Roberto Antonietti & Maria Rosaria Ferrante & Riccardo Leoncini, 2014. "Spatial Agglomeration, Production Technology and the Choice to Make and/or Buy: Empirical Evidence from the Emilia Romagna Machine Tool Industry," Regional Studies, Taylor & Francis Journals, vol. 48(2), pages 284-300, February.
- Goldstein, G. S. & Gronberg, T. J., 1984. "Economies of scope and economies of agglomeration," Journal of Urban Economics, Elsevier, vol. 16(1), pages 91-104, July.
When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa12p666. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gunther Maier)
If references are entirely missing, you can add them using this form.