Globalization of Production and Innovation: How Outsourcing is Reshaping an Advanced Manufacturing Area

Abstract

Cusmano L., Mancusi M. L. and Morrison A. Globalization of production and innovation: how outsourcing is reshaping an advanced manufacturing area, Regional Studies. This paper investigates the determinants and the spatial and functional dimensions of firms' outsourcing. Based on a large survey of manufacturing firms in Lombardy, Italy, the analysis shows that outsourcing is remarkably wide across sectors and has a clear regional dimension, concerning highly skilled firms at most. Offshoring is still a minor fraction of the deverticalization process, largely related to wider strategies of internationalization by foreign group subsidiaries at intermediate stages of the value chain. The evidence suggests the regional system is inserting onto global knowledge networks, but also points at the risk of ‘branch plant effects’ in high-technology segments.

Cusmano L., Mancusi M. L. et Morrison A. La mondialisation de la production et de l'innovation: comment l'approvisionnement à l'extérieur réorganise une zone industrielle avancée, Regional Studies. Cet article cherche à examiner les déterminants et la portée géographique et fonctionnelle de l'approvisionnement à l'extérieur des entreprises. A partir d'une enquête détaillée des entreprises industrielles situées en Lombardie en Italie, l'analyse laisse voir que l'approvisionnement à l'extérieur s'avère très généralisée à travers les secteurs et a une portée nettement régionale en ce qui concerne notamment les entreprises dont la main-d'oeuvre est hautement qualifiée. Les activités offshore représentent toujours une proportion négligeable du processus de désintegration verticale et se rapporte étroitement aux stratégies d'internationalisation des filiales des groupes étrangers aux étapes intermédiaires de la chaîne des valeurs. Les preuves laissent supposer que le système regional s'insère dans des réseaux de connaissance mondiaux, mais indique également la menace que pose des ‘effets établissement’ dans les secteurs à la pointe de la technologie.

Approvisionnement à l'extérieur Activités offshore Système de production régional Industrie Italie

Cusmano L., Mancusi M. L. und Morrison A. Die Globalisierung von Produktion und Innovation: Wie sich eine fort geschrittene Produktionsregion durch Outsourcing verändert, Regional Studies. In diesem Beitrag untersuchen wir die Determinanten sowie die räumlichen und funktionellen Dimensionen des Outsourcing von Firmen. Ausgehend von einer umfangreichen Erhebung unter produzierenden Firmen in der Lombardei, Italien, geht aus der Analyse hervor, dass das Outsourcing in den verschiedenen Sektoren bemerkenswert weit verbreitet ist und eine eindeutig regionale Dimension aufweist, die vor allem Firmen mit hohem Qualifikationsniveau betrifft. Die Verlagerung ins Ausland stellt weiterhin einen kleinen Bruchteil des Devertikalisierungsprozesses dar und ist größtenteils mit den breiter angelegen Internationalisierungsstrategien von Filialen ausländischer Konzerne auf den mittleren Stufen der Wertschöpfungskette verknüpft. Die Belege lassen darauf schließen, dass sich das regionale System in die globalen Wissensnetzwerke einfügt, weisen aber auch auf das Risiko von ‘Zweigwerkseffekten’ in Hightech-Segmenten hin.

Outsourcing Verlagerung ins Ausland Regionales Produktionssystem Produzierende Industrie Italien

Cusmano L., Mancusi M. L. y Morrison A. Globalización de producción e innovación: cómo la contratación externa remodela un área manufacturera avanzada, Regional Studies. En este artículo investigamos los determinantes y las dimensiones espacial y funcional de la contratación externa de empresas. Basándonos en un importante estudio de empresas manufactureras de Lombardía, Italia, en este análisis mostramos que la contratación externa está muy extendida en todos los sectores y tiene una clara dimensión regional, sobre todo con respecto a las empresas altamente cualificadas. La externalización de servicios representa todavía una fracción menor del proceso de desverticalización, y en gran medida relacionada con estrategias más extensas de la internacionalización por parte de filiales de grupos extranjeros en fases intermedias de la cadena de valores. La evidencia indica que el sistema regional se inserta en las redes de conocimiento globales pero también señala el riesgo de ‘efectos de las sucursales’ en segmentos de alta tecnología.

Contratación externa Externalización de servicios Sistema de producción regional Industria manufacturera Italia

Keywords:

• Outsourcing
• Offshoring
• Regional production system
• Manufacturing industry
• Italy

JEL classifications:

• D21
• F23
• L23
• O32

Acknowledgements

The authors would like to thank the participants at the following: ProAct Conference (Tampere, Finland), International Schumpeter Society Conference (Nice, France), EARIE Conference (Amsterdam, the Netherlands), EMAEE Conference (Manchester, UK), and in seminars and workshops at the Università di Roma Tre (Rome, Italy), CESPRI-Università Commerciale ‘L. Bocconi’ (Milan, Italy), Università del Salento (Lecce, Italy), Università del Piemonte Orientale (Novara, Italy), and Beta-Université Louis Pasteur (Strasbourg, France). Financial support from IReR-Lombardia is gratefully acknowledged. Andrea Morrison also acknowledges funding from the Italian Ministry of Education, University and Research (PRIN 2005 on ‘Fragmentation and Local Development’).

Notes

Tomiura (2005) provides a concise review.

O'Farrell et al. (1993) define this process of vertical disintegration as ‘service unbundling’.

For the sake of clarity and to ease interpretation, these relationships will be presented in detail in the fifth section when discussing the structure of the empirical analysis on firm-level characteristics and the geographical scope of outsourcing.

Lombardy has been the focus of early investigations about flexible production systems and industrial district models, emerging in the late 1970s as a peculiar case of diffused industrial development based on small and medium-sized enterprises (Garofoli, 1983).

The survey adopted a broad definition of R&D, which is intended as any activity oriented towards research and experimentation.

A total of 69% of firms offshoring R&D activities do so, at least partially, to a group affiliate. The corresponding figures for production and services are 64% and 52%, respectively. The difference is, however, more striking when considering firms offshoring exclusively to group affiliates: these are 35% of firms offshoring R&D, but only 2% of firms offshoring production and 7% of firms offshoring services.

The survey specifically asked whether the firm produces a final good or an intermediate good.

Here the survey first asked if the firm has pursued any foreign direct investment, distinguishing between: (1) production facilities, (2) an R&D laboratory, and (3) a sales office.

In the survey, whenever the respondent declared the firm belonged to a group, he/she was asked to specify the position of the firm within the group.

In the regressions, all continuous variables are measured in logs: to treat observations with zero value in some of the relevant variables, a ‘1’ was added before taking the logarithm.

Mol (2005) finds a positive and significant effect of productivity on outsourcing. However, in his regressions the coefficient of productivity is effectively zero.

This is again obtained from a survey question asking for the country of residence of the subjects retaining either the ownership or the control of the firm.