Subcontracting in Italian Industry: Labour Division, Firm Growth and the North–South Divide

Abstract

Giunta A., Nifo A. et Scalera D. Subcontracting in Italian industry: labour division, firm growth and the North–South divide, Regional Studies. The aim of this paper is to investigate the impact of subcontracting on Italian manufacturing firms' growth in the second half of the 1990s. The main results are: (1) producing as subcontractors does not penalize firms but can be a positive determinant of growth, especially when coupled with the propensity to innovate; (2) since a non-linear relationship between growth and subcontracting emerges, an organizational mode not fully specialized in either subcontracting activity or direct sales may be optimal; and (3) the deep dualism of the Italian industrial structure is confirmed, as Southern subcontractors show poorer performances and slower growth.

Giunta A., Nifo A. and Scalera D. 意大利产业中的分包：劳动力分配、公司增长以及南北分异，区域研究。 本文旨在考察上世纪90年代后期分包对于意大利制造业公司增长的影响。主要的研究结果包括：（1）作为分包商非但没有对公司产生负面影响反而成为增长中的积极决定因素，尤其是当其与创新结合的情况下；（2）由于在增长与分包中存在非线性关联，一种既非完全关注于分包活动也非直销的组织模式得到推崇；（3）研究肯定了意大利产业结构中存在的深层次二元性，表现在南部分包商业绩较差且增长缓慢。

分包 价值链 区位 公司增长

Giunta A., Nifo A. et Scalera D. La sous-traitance dans l'industrie italienne: la division du travail, la croissance des entreprises et le clivage Nord-Sud, Regional Studies. Cet article cherche à examiner l'impact de la sous-traitance sur la croissance des entreprises industrielles italiennes pendant la deuxième moitié des années 90. Les principaux résultats sont les suivants: (1) produire en tant que sous-traitant ne pénalise pas les entreprises mais peut s'avérer un déterminant positif de la croissance, notamment quand on y associe la propensité à innover; (2) étant donné qu'il en ressort un rapport non-linéaire entre la croissance et la sous-traitance, il se peut qu'un mode organisationnel qui ne se spécialise à fond, ni en la sous-traitance, ni en les ventes directes, soit optimal; et (3) le dualisme profond de la structure industrielle italienne se voit confirmer, vu que les sous-traitants du Sud font preuve d'une performance faible et d'un taux de croissance plus lent.

Sous-traitance Chaîne des valeurs Emplacement Croissance des entreprises

Giunta A., Nifo A. und Scalera D. Untervergabe von Aufträgen in der italienischen Industrie: Arbeitsteilung, Firmenwachstum und das Nord-Süd-Gefälle, Regional Studies. In diesem Beitrag wird untersucht, wie sich die Untervergabe von Aufträgen in der zweiten Hälfte der neunziger Jahre auf das Wachstum von produzierenden Firmen in Italien ausgewirkt hat. Die wichtigsten Ergebnisse sind: (1) eine Produktion als Subunternehmen ist für die Firmen nicht mit Nachteilen verbunden, sondern kann insbesondere in Verbindung mit einer Innovationsneigung einen positiven Determinanten für Wachstum darstellen; (2) da sich eine nicht lineare Beziehung zwischen Wachstum und Untervergabe abzeichnet, könnte sich eine Organisationsform als optimal erweisen, die sich nicht ausschließlich auf Untervergabe bzw. Direktverkäufe spezialisiert; (3) der grundlegende Dualismus der italienischen Industriestruktur wird bestätigt, da südliche Subunternehmen weniger Leistung und langsameres Wachstum aufweisen.

Untervergabe von Aufträgen Wertschöpfungskette Standort Firmenwachstum

Giunta A., Nifo A. y Scalera D. Subcontratación en la industria italiana: división laboral, crecimiento de las empresas y la división norte-sur, Regional Studies. El objetivo de este artículo es investigar el efecto de la subcontratación en el crecimiento de las empresas manufactureras italianas en la segunda mitad de los noventa. Los resultados principales son: (1) la producción en la subcontratación no penaliza a las empresas sino que puede ser un determinante positivo del crecimiento, especialmente cuando se combina con la predisposición a la innovación; (2) puesto que surge una relación no lineal entre el crecimiento y la subcontratación, podría ser ideal un modo de organización que no esté totalmente especializado en la actividad de subcontratación o en las ventas directas; y (3) se confirma el fuerte dualismo de la estructura industrial italiana, puesto que los subcontratistas del sur demuestran peores resultados y un crecimiento más lento.

Subcontratación Cadena de valores Ubicación Crecimiento de empresas

Keywords:

• Subcontracting
• Value chain
• Location
• Firm growth

JEL classifications:

• D23
• L23

Acknowledgements

The authors gratefully thank two anonymous referees, Alessandro Arrighetti, Marco Corsino, Christopher Gilbert, Maria Luisa Segnana and Paola Villa for their comments on a previous version of this paper; Area Studi Capitalia for providing access to its database; and Cynthia Little and Eleonora Pierucci for research assistance.

Notes

Subcontracting firms are those that sign contracts with client firms to supply intermediate products (specific components and services or more complex inputs). In what follows, the term ‘subcontracting intensity’ is used to refer to the share of sales related to subcontracting over total sales.

Several studies provide evidence of this phenomenon (for example, OECD, 2007a; Marin, 2006; Havik and McMorrow, 2006). In particular, Havik and McMorrow (2006) estimated that between 1992 and 2000 the world average share of intermediate imports in total imports rose by some 4 percentage points, with increases of 6 percentage points for Europe, 3 percentage points for the United States, 5 percentage points for South East Asia, and 9 percentage points for China. Jones and Kierzkowski (1990) wrote a seminal piece on the emergence of a new trend in globalization based on advances in the technologies of transportation and communication and the decomposition of the production process across borders.

There are no clear-cut definitions in the literature of outsourcing and offshoring (and their relative measures) (OECD, 2007a). In the present paper, outsourcing and offshoring mean, respectively, the relocation of activities outside the firm to an independent input supplier (subcontractor) and the relocation of activities to a different country within a structure belonging to or external to the firm.

The value chain is the set of activities involved in the production and sale of commodities. It is global when activities are allocated across firms localized in several different countries. For a survey of industrial subcontracting networks, see Sacchetti and Sugden (2003).

However, a substantial part of international vertical specialization among multinational enterprises also takes place through these firms' intra-industry trade in intermediate inputs (Borga and Zeile, 2004). See also Antras (2003), who underlines the fact that capital-intensive intermediate goods tend to be imported within the boundaries of multinational firms; and Hanson et al. (2003), who documents equally impressive growth in the trade in multinational enterprises.

Worthwhile to mention here is the eclectic paradigm of international production proposed by Dunning (1993). For a more recent appraisal of ownership, location, international advantage (OLI) theory in light of the changing characteristics of multinational enterprises activity and the global economic scenario, see Dunning (2001). The impact of multinational enterprises investments on local subcontracting networks has been documented (for example, Dries and Swinnen, 2004).

From 1994 to 2005, annual labour productivity growth was 0.5% on average. In the same period, the share of Italian exports on total world exports decreased from 4.5% to 2.9% (Rossi, 2006).

For a comprehensive analysis of industrial districts, see Becattini et al. (2009). On the geography of Italian industrial districts, see Sforzi (2002).

Several authors argue that the gains in productivity associated with ICT investment are conditional on the micro-complementarities among ICT adoption, internal reorganization processes and high levels of human capital (Brynjolfsson and Hitt, 2000; Bresnahan et al., 2002; Falk, 2002; Hur et al., 2005; and with specific reference to Italy, see Trento and Warglien, 2003; Bugamelli and Pagano, 2004; and Lucchetti and Sterlacchini, 2004).

‘Mezzogiorno’ is the term used to denote the South of the country; in the literature it refers to the mainland regions of Abruzzo, Molise, Campania, Basilicata, Apulia and Calabria, plus the islands of Sicily and Sardinia.

Other possible effects of outsourcing have also been investigated. For example, there has been intense discussion of the impact on wages and employment (Hegger and Kreickemeier, 2008; Kohler, 2009).

Gereffi and Korzeniewicz (1994) used the term ‘global commodity chain’, rather than GVC. The term ‘commodity’ implies the production of undifferentiated products in processes with low barriers to entry, whereas, according to Kaplinsky (2000, p. 9), ‘the search for sustainable income growth requires producers to position themselves precisely in non-commodity, high barriers to entry activities in the value chain’. Humphrey and Schmitz (2002) reported that Gereffi and other researchers, at a workshop held in Bellagio, Italy, in September 2000, agreed to use the term ‘GVC’ to refer to firms' linkages in global chains.

Humphrey and Schmitz (2002) suggested that four types of value chain relationships can be distinguished: arm's-length relations, networks, quasi hierarchies and hierarchies. Among others, Giuliani et al. (2005) dealt with the relationship between value chain governance and firm upgrading.

Note, however, that some studies (e.g. Geroski, 1998) find poor correlation between performance indicators based on accounting measures and growth rates.

The statistics shown in Tables 1–4 are calculated from Capitalia (1998, 2001) data; Tables 5 and 6 present the results of the econometric estimations carried out using data from the same sources. Where necessary, data are deflated by the Istituto Nazionale di Statistica (ISTAT) price index NIC (Intera Collettività Nazionale).

The same conclusions hold if one considers median growth rates (shown in parentheses in Tables 1 and 2 ). Especially for employment growth (Table 1 ), median values are considerably lower than mean values, indicating that high average growth rates are presumably due to a relatively small number of firms growing very quickly.

The Sargan tests reported in Tables 5 and 6 do not reject the hypothesis that over-identification constraints hold. Secondly, the F-test on the joint significance of excluded instruments in the first-stage regression always rejects the null hypothesis of joint insignificance, even though in two out of six cases – equations (2) and (3) for growth of real sales – the F-statistic does not reach the Stock and Yogo (2005) strong instrument critical value.