Innovation and the geographical and functional dimensions of outsourcing: An empirical investigation based on Italian firm level data

Lucia Cusmano, Maria Mancusi and Andrea Morrison

No 210, KITeS Working Papers from KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy

Abstract: The paper investigates the diversified patterns of outsourcing in the Lombardy region and relates them to the probability of introducing product and process innovation. Based on a large firm-level survey, we show that outsourcing processes are strongly regionally embedded and that offshoring is still a limited phenomenon. Outsourcing strategies are shown to have a positive impact on firms’ innovation. In particular, the outsourcing of service activities contributes the most to innovation, thus suggesting that firms successfully pursue core strengthening strategies. Our econometric estimates show that both geographical and organizational proximity matter. Indeed, the positive association of services with innovation is strongly related to their regional dimension, which points toward the importance of local user-producer relationships. When outsourcing crosses national borders, keeping the outsourced activities at least loosely connected to the firm appears critical, as offshoring to non affiliated firms has a clear negative impact on innovation.

Keywords: Product Innovation; Process Innovation; Outsourcing; Offshoring. (search for similar items in EconPapers)
JEL-codes: D21 F23 L22 L23 O31 O32 O33 (search for similar items in EconPapers)
Pages: pages 24
Date: 2007-12, Revised 2007-12
New Economics Papers: this item is included in nep-cse, nep-geo, nep-ino and nep-tid
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Citations: View citations in EconPapers (2)

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Working Paper: Innovation and the geographical and functional dimensions of outsourcing: An empirical investigation based on Italian firm level data (2008)
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