Family Firms and Input Procurement: Firm-Level Evidence from Italy

37 Pages Posted: 29 Jun 2022

See all articles by Pietro De Ponti

Pietro De Ponti

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS)

Valeria Gattai

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS)

Date Written: June 29, 2022

Abstract

This paper empirically analyses input procurement using Italian firm-level data. Combining the international economics literature on global sourcing with the family business and international business literature on family firms (FFs)’ internationalization, we build a comprehensive framework in which sourcing is shaped by location (domestic versus foreign sourcing) and ownership (integration versus outsourcing) decisions. Relying on a new firm-level, cross-sectional dataset on a large and stratified sample of Italian manufacturing firms, we address the relationship between global sourcing and firm-level features, such as family presence in ownership and control, productivity, and input specificity. Our probit and multinomial probit estimates suggest that the FF status is negatively related to foreign sourcing, and it plays little role in orienting firms’ ownership decisions; moreover, firms’ productivity fosters foreign sourcing, and reliance on specific inputs favors integration. Our study contributes to the International Economics literature on global sourcing by studying factors other than productivity and input specificity that affect input procurement; moreover, it contributes to the Family Business and International Business literature on FFs’ internationalization by taking a supply-side perspective and investigating sourcing through the interplay between location and ownership choices.

Keywords: productivity, input specificity, family firms, input procurement, sourcing

JEL Classification: F23, D23, C35, L24

Suggested Citation

De Ponti, Pietro and Gattai, Valeria, Family Firms and Input Procurement: Firm-Level Evidence from Italy (June 29, 2022). University of Milan Bicocca Department of Economics, Management and Statistics Working Paper No. 499, Available at SSRN: https://ssrn.com/abstract=4149448

Pietro De Ponti

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milan, 20126
Italy

Valeria Gattai (Contact Author)

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milan, 20126
Italy

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