Internationalisation and the Agglomeration Effect: Evidence from the Italian Automotive Supply Chain

49 Pages Posted: 27 Jan 2016

See all articles by Emanuele Bacchiocchi

Emanuele Bacchiocchi

Università degli Studi di Milano

Massimo Florio

University of Milan - Department of Economics, Management and Quantitative Methods (DEMM)

Anna Giunta

Department of Economics Roma Tre University

Date Written: October 27, 2010

Abstract

We study the internationalisation process in a representative sample of 786 firms in the Italian automotive supply chain. Most of these firms have agglomerated in the Turin industrial district, the cradle of FIAT, the dominant Italian car-maker and one of the global players in the automotive industry. Both FIAT and its suppliers have experienced a substantial process of internationalisation. Our main research question is straightforward: is the internationalisation process of the Italian firms in the automotive supply chain driven by the off-shoring of FIAT activities, or is it a relatively independent process, driven by the cumulated effect of agglomeration in a Marshallian-type urban district? We build an Internationalisation Strategy Index, that discriminates between firms that do not export at all, or that export without owning structured sale or production organisations abroad, or that possess such organisations. After controlling for firms’ characteristics, and building three simple agglomeration indicators, we perform a multinomial logit micro-econometric analysis. We find that there is an impact of agglomeration on firms’ internationalisation, independent from the vertical linkages between suppliers and their main customer FIAT. In fact, dependency from sales to FIAT decreases the probability of internationalisation, while being located in a high-density industrial district has the opposite effect. This result points to a positive impact of agglomeration per se, particularly in a urban context, and rejects the alternative view that internationalisation of firms in the supply chain is driven by the core firm in the “hub-and-spoke” context.

Keywords: Internationalisation; Automotive Industry, Agglomeration Effect, Spatial Distribution of Regional Economic Activity, Global Value Chains

JEL Classification: D21, L62, F23, C25

Suggested Citation

Bacchiocchi, Emanuele and Florio, Massimo and Giunta, Anna, Internationalisation and the Agglomeration Effect: Evidence from the Italian Automotive Supply Chain (October 27, 2010). Available at SSRN: https://ssrn.com/abstract=2723427 or http://dx.doi.org/10.2139/ssrn.2723427

Emanuele Bacchiocchi

Università degli Studi di Milano ( email )

Milan, 20122
Italy

Massimo Florio (Contact Author)

University of Milan - Department of Economics, Management and Quantitative Methods (DEMM) ( email )

Via Conservatorio 7
I-20122 Milano, 20122
Italy
+39 02 50321510 (Phone)
+39 02 50321505 (Fax)

HOME PAGE: http://www.demm.unimi.it/ecm/home

Anna Giunta

Department of Economics Roma Tre University ( email )

Via Silvio D'Amico 77
Rome, 00145
Italy

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