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

Roberto Antonietti () and Giulio Cainelli

No 2007.58, Working Papers from Fondazione Eni Enrico Mattei

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 (search for similar items in EconPapers)
JEL-codes: L23 L24 L25 O31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cse, nep-eff, nep-ino and nep-tid
Date: 2007-05
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Journal Article: Production Outsourcing, Organizational Governance and Firm’s Technological Performance: Evidence from Italy (2008)
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