Causes of subcontracting: Evidence from panel data on construction firms

Manuel González, Benito Arruñada and Alberto Fernández

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: This paper examines factors explaining subcontracting decisions in the construction industry. Rather than the more common cross-sectional analyses, we use panel data to evaluate the influence of all relevant variables. We design and use a new index of the closeness to small numbers situations to estimate the extent of hold-up problems. Results show that as specificity grows, firms tend to subcontract less. The opposite happens when output heterogeneity and the use of intangible assets and capabilities increase. Neither temporary shortage of capacity nor geographical dispersion of activities seem to affect the extent of subcontracting. Finally, proxies for uncertainty do not show any clear effect.

Keywords: Intangible assets; monitoring costs; specificity; subcontracting; vertical integration; uncertainty (search for similar items in EconPapers)
JEL-codes: L14 L22 L74 (search for similar items in EconPapers)
Date: 1999-11
New Economics Papers: this item is included in nep-ind
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Causes of subcontracting: evidence from panel data on construction firms (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:428

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