Outsourcing and Firm Performance: Evidence from the Italian Manufacturing Industry (original) (raw)
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International Outsourcing and Productivity in Italian Manufacturing Sectors
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This paper estimates the effect of international outsourcing of materials and services on productivity in Italian manufacturing sectors during the period 1985-1997. Three different measures of outsourcing are used. Firstly, a narrow measure of outsourcing is calculated as the bulk of intermediate inputs that each sector imports from the same sector abroad. Secondly, a broad measure of outsourcing of materials is calculated as the sum of materials imported from non-energy manufacturing sectors abroad. Finally, outsourcing of services is measured as total business and financial services imported from abroad. Outsourcing is modelled as to affect TFP and results suggest a general positive effect of outsourcing of materials. The effect of outsourcing of services seems to be ambiguous: it is positive for the traditional sectors and negative for more advanced ones. Marche-a.loturco@univpm.it. I am particularly indebted with Alberto Russo and Francesco Venturini for useful comments and suggestions.
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We employ supply-and-use input-output tables to study the relation between offshoring and productivity growth in the Italian manufacturing industries in the second half of the 1990s and early 2000s. We find three main results. First, our 2SLS estimates indicate that, in Italy, at variance with the evidence available for the US and the UK, the external outsourcing of intermediates is beneficial for productivity growth, while the off-shoring of services is not. Second, the way in which off-shoring is measured matters quite considerably. The positive and significant relation between off-shoring intermediates and productivity growth disappears when we replace our direct measure of off-shoring with the commonly used Feenstra-Hanson measures. The results for intermediates also disappear when a broad -rather than a narrow -measure of off-shoring is used. Third, our estimates also indicate that, unlike in previous studies, IT investment does not robustly predict off-shoring, which is instead well instrumented by past capital accumulation rates and levels plus period and industry effects.
The effects of outsourcing on firm productivity: Evidence from microdata in the Netherlands
International outsourcing is an important aspect of economic globalization. Since outsourcing leads to more specialization, it is expected to reduce production costs and to increase productivity. This study uses microdata on Dutch firms to investigate the effects of international and domestic outsourcing on firm productivity at the firm level. It is based on a unique survey on outsourcing covering the period 2001-2006. The survey allows us to distinguish between domestic and international outsourcing and between outsourcing of core and support activities. We study the effects of these different types of outsourcing on labour productivity and total factor productivity (TFP). The results show that, without adjusting for firm size, more productive firms are more likely to outsource. When we adjust for firm fixed effects, the results suggest that international outsourcing of core functions decreased TFP and domestic outsourcing of support functions increased TFP.
SSRN Electronic Journal, 2000
The paper aims at 'embedding' the outsourcing firm by considering it as a four-fold unit of analysis: i.e. as an organizational, production, industrial and innovation unit. Theoretical correlations between outsourcing decisions and outsourcing variables are formulated and then tested with respect to a representative cross-sectional sample of firms of a local production system in Emilia Romagna (that is, Reggio Emilia). The main result of the paper is that outsourcing decisions are indeed affected by the organizational and industrial relations typical of the context firms are embedded in. Furthermore, the general profile of the Reggio Emilia outsourcing firm is strategic rather than operative. In particular, tapping-into the provider's resources and competences to eventually promote technological innovation seems more relevant than searching for lower costs by contracting out.
Outsourcing and Firm Performance – A Comparative Study of Swiss and Greek Firms
SSRN Electronic Journal, 2000
This paper aims at analyzing (a) the factors determining the firms' propensity to outsource various processes (b) the impact of outsourcing on firms' innovation performance as well as labour productivity. The integral investigation of the determining factors as well as the impact of outsourcing on innovation and productivity based on the same data in a comparative setting is the new element this study adds to existing empirical literature. Relocation to external providers is related to (parts of) the production process of final products and intermediate products as well as Research and Development (R&D) and Information and Communication Technology (ICT) services.