Production Outsourcing, Organizational Governance and Firm's Technological Performance: Evidence from Italy

29 Pages Posted: 5 Jun 2007

See all articles by Roberto Antonietti

Roberto Antonietti

University of Padova - "Marco Fanno" Department of Economics and Management

Giulio Cainelli

Università degli Studi di Bari - Dipartimento per lo Studio delle Societa Mediterranee; CERIS-CNR

Date Written: May 2007

Abstract

Aim of this paper is to study whether and how the firm's decision to outsource production activities affects its technological performance. In particular, we look at how the alignment between the firm's governance strategy and the underlying attributes of the transactions affects the capacity of the firm to introduce new products and processes. Using microeconomic data on a repeated cross-section of Italian manufacturing firms for the period 1998-2003, we develop a two-stage approach: first, we estimate the determinants of the firm's organizational governance (production outsourcing); second, we incorporate a measure of governance misalignment into a technological performance relation. We find (i) that firms not aligned with the optimal organizational governance perform less well in terms of process innovation than more aligned competitors, but (ii) that misalignment has a positive effect on product innovation. However, this counterintuitive result is strongly characterized by non-linear effects that reverse the latter correlation for high values of governance misfit.

Keywords: Production Outsourcing, Organizational Governance, Misalignment, Technological Performance, Non-Linearity

JEL Classification: L23, L24, L25, O31

Suggested Citation

Antonietti, Roberto and Cainelli, Giulio, Production Outsourcing, Organizational Governance and Firm's Technological Performance: Evidence from Italy (May 2007). FEEM Working Paper No. 58.2007, Available at SSRN: https://ssrn.com/abstract=990006 or http://dx.doi.org/10.2139/ssrn.990006

Roberto Antonietti (Contact Author)

University of Padova - "Marco Fanno" Department of Economics and Management ( email )

via Del Santo 33
Padova, PD 35123
Italy
+390498271508 (Phone)
+390498274211 (Fax)

HOME PAGE: http://www.economia.unipd.it/category/ruoli/personale-docente?key=4FD07667CE6DC0DA28DDD61A73393A5F

Giulio Cainelli

Università degli Studi di Bari - Dipartimento per lo Studio delle Societa Mediterranee ( email )

Piazza Umberto I
70124 Bari, 70121
Italy

CERIS-CNR ( email )

Via Avogadro 8
10121 Torino
Italy

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