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Civic capital and the Vertical Integration of Service Provision: Evidence from Italy

Matthias Bürker and Gaetano Alfredo Minerva

Working papers from Banque de France

Abstract: This paper studies whether civic capital acts an effective restraint against opportunistic behavior in transactions, looking at the degree of outsourcing to external suppliers of services in Italian firms. Our results show that, on average, firms tend to outsource more services where civic capital is higher. This effect is particularly strong for firms operating in industries where businesses can easily adjust the level of purchased services to their idiosyncratic needs. To address the issue of endogeneity we also instrument the current stock of civic capital by historical variables. We argue that the rise in the propensity to engage in transactions with outside service suppliers is evidence of a decrease in the opportunistic behavior between the parties involved in the transaction.

Keywords: Civic Capital; Opportunism; Vertical Integration; Service outsourcing; Transaction Cost Economics (search for similar items in EconPapers)
JEL-codes: A13 D23 L23 Z13 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2015
New Economics Papers: this item is included in nep-hrm and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Civic Capital and the Vertical Integration of Service Provision: Evidence from Italy (2013) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:564

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