Outsourcing of advanced business services in the Spanish economy: Explanation and estimation of the regional effects

Abstract

The use of advanced business services has become an essential element for competitiveness in modern economies in which traditional competitive advantages based on prices, lower labour costs or the abundance of natural resources are being replaced by new advantages based on higher quality, greater knowledge or the use of information and communication technologies (ICTs). Within this context certain services (computing, communications, human resources, engineering, consulting or management) are generally outsourced so as to exploit the advantages derived from specialisation and division of labour, as well as those of economies of scope and scale. However, some businesses, sectors or regions appear to have very different patterns of outsourcing advanced producer services. This paper presents an explanation of elements of business outsourcing decisions applied to the Spanish economy, applying discrete response models to the information obtained in a survey elaborated by the authors. The data thus obtained have enabled us to identify differences between the Spanish regions in the tendencies of businesses to use internal or external advanced services.

Acknowledgments

The authors wish to express their gratitude for the comments received in Castres (France) at the XIV RESER International Conference and the suggestions made by Professors Andrew Murphy and Markus Scheuer.

Notes

1. Authors such as Walker [1985], Porter [1990], Martinelli [1991], Mas [1992] or Fixler and Siegel [1999] highlight in their studies the influence of these activities on business competitiveness.

2. The type of society was identified by Ruyssen [1987], who indicated that one cannot properly speak of deindustrialisation but rather of a new economy, of a mixed society, of a combination of goods and services based on three pillars: a contribution of grey matter in production processes, qualitative changes at all levels by means of the increasing incorporation of services in all the phases of the production system and growing interdependence among technologies, firms, sectors and regions.

3. The literature on this topic is very extensive; however, we recommend the synthesis presented in Daniels and Moulaert [1991] and in Illeris [1996]. For Spain, see Martínez and Rubiera [1999].

4. In principle, this migrating will only be in the demand for advanced services, although in the long term the firm will be able to consider relocating in these areas equipped with an extensive private network of advanced services in search of the profits that proximity to these providers will generate for them.

5. The survey, to which we shall refer in the fourth section, does not guarantee the representativeness of the data for all the Spanish regions, therefore making groupings of these necessary.

6. A greater number of replies was obtained but the authors have selected those cases which answer all the questions asked and show coherence in the control variables used for evaluating the validity of the answer.

7. The 180 companies have a similar geographical and sector structure compared with the overall population delimitated using the DIRCE database (from INE, Spanish National Institute of Statistics). Taking into consideration both this and the number of replies obtained, the margin of error of our survey could be close to 7 per cent (less than 10 per cent). It implies that the results are representative of the whole population but must be carefully interpreted as in our paper.