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Causes of Subcontracting: Evidence from Panel Data on Construction Firms

Posted: 12 Oct 2000  

Manuel González Díaz

Universidad de Oviedo - Facultad de Economicas

Benito Arruñada

Pompeu Fabra University

Alberto Fernández

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences

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Abstract

This paper examines factors explaining subcontracting decisions in the construction industry. Rather than the more common cross-sectional analyses, we use panel data to evaluate the influence of all relevant variables. We design and use a new index of the closeness to small numbers situations to estimate the extent of hold-up problems. Results show that as specificity grows, firms tend to subcontract less. The opposite happens when output heterogeneity and the use of intangible assets and capabilities increase. Neither temporary shortage of capacity nor geographical dispersion of activities seem to affect the extent of subcontracting. Finally, proxies for uncertainty do not show any clear effect.

Keywords: Intangible assets, monitoring costs, specificity, subcontracting, vertical integration, uncertainty

JEL Classification: L22, L14, L74

Suggested Citation

González Díaz, Manuel and Arruñada, Benito and Fernández, Alberto, Causes of Subcontracting: Evidence from Panel Data on Construction Firms. Journal of Economic Behavior and Organization, Vol. 42, No. 2, Pp. 167-187, 2000. Available at SSRN: https://ssrn.com/abstract=240229

Manuel González Díaz (Contact Author)

Universidad de Oviedo - Facultad de Economicas ( email )

Campus del Cristo, s/n
Oviedo, Asturias 33071
Spain

Benito Arruñada

Pompeu Fabra University ( email )

Ramon Trias Fargas 25-27
Department of Economics and Business
Barcelona, 08005
Spain
+34 93 542 25 72 (Phone)
+34 93 542 17 46 (Fax)

HOME PAGE: http://www.econ.upf.edu/~arrunada

Alberto Fernández Alonso

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain

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