Balancing vertical integration and strategic outsourcing: effects on ...
Outsourcing Integration
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Outsourcing versus integration at home and abroad Stefano Federico ∗ October 2008 Abstract Using data on a sample of Italian manufacturing companies, this paper analyze s the lo cation (at home or abroad) and the mode of orga- nization (outsourcing versus integration) of intermediate inputs pro- duction. We find evidence of a productivity orderi ng (largely consis- tent with the assumptions in Antr` as and Helpman 2004) where foreign integration is chosen by the most productive firms while domestic out- sourcing is chosen by the least productive firms; firms with medium- high productivity choose domestic integration, firms with medium-low productivity foreign outsourcing. We also find that the preference for integration over outsourcin g is positiv ely related to sev eral indic a- tors of headquarter intensity, notably capital intensity, as predicted by Antr` as (2003) and Antr` as and Helpman (2004). Keywords : in- ternational outsourcing; foreign direct investment; intr a-firm trade; productivity. JEL Classification : F12; F23; L22. ∗ Bank of Italy. E-mail address: [email protected]. I am grateful to Luigi Federico Signorini, Lucia Tajoli, Roberto Tedeschi and participants to the 2008 ETSG Confe renc e in Warsaw for their useful comme nts. The views expressed in this paper are those of the author and do not necessarily reflect those of the Bank of Italy. 1
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![MUTUAL COMMITMENT TO SUPPORT EXCHANGE 1. Definitions of Vertical Integration and Outsourcing Firm t2 Market t2 Firm t0 Number of Employees [Proposition 2] Outsourcing [Proposition](https://static.fdocuments.in/doc/165x107/5af1df207f8b9a8c308f0873/mutual-commitment-to-support-1-definitions-of-vertical-integration-and-outsourcing.jpg)
