Spatial Agglomeration, Technology and Outsourcing of Knowledge Intensive Business Services Empirical Insights from Italy

Roberto Antonietti () and Giulio Cainelli

No 2007.79, Working Papers from Fondazione Eni Enrico Mattei

Abstract: Aim of this paper is to explore the main drivers of outsourcing of knowledge intensive business services by Italian manufacturing firms. While anecdotal and empirical evidence has emphasized labour cost and scale economies as behind firms’ choices to outsource production or service activities, here we focus on spatial agglomeration and technology as important factors. Using microeconomic data on a repeated cross-section of Italian manufacturing firms for the period 1998-2003, we develop a two-stage model in order to avoid selection bias: first, we estimate the determinants of the firm's decision to outsource business-related services; second, we estimate the main factors underlying the intensity and complexity of KIBS outsourcing, expressed by the number of service activities that are externalized. Our results show that labour cost-savings are not relevant in driving the decision to outsource KIBS, but ICT, R&D and location within a dense and technologically developed industrial district have very positive effects.

Keywords: KIBS; Service Outsourcing; R&D; ICT; Spatial Agglomeration (search for similar items in EconPapers)
JEL-codes: L24 L84 R32 R12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec, nep-geo, nep-ino, nep-knm and nep-ure
Date: 2007-07
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Persistent link: http://EconPapers.repec.org/RePEc:fem:femwpa:2007.79

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