Agglomeration, related variety and vertical integration

Several recent studies investigate the relation between geographic concentration of production and vertical integration, based on the hypothesis that spatial agglomeration of firms in the same industry facilitates input procurement thereby reducing the degree of vertical integration. The present paper contributes to this debate by also considering the effects of industry variety at the local level. Specifically, we consider two forms of variety: unrelated variety and vertically related variety. The latter index is constructed using information drawn from input-output tables and captures the opportunities for outsourcing within the local system. We consider inter-industry vertical integration by taking account of the ownership of activities with input-output linkages. Using a dataset of 24,663 Italian business groups in 2001, we estimate Tobit models to investigate the influence of vertically related variety and other agglomeration forces on the degree of vertical integration of groups. Our evidence confirms that vertical integration is influenced by industry specialization at the local level. We also find that the higher the vertically related variety, the lower the need for firms to integrate activities since they have more opportunities to acquire intermediate goods and services within the local system.vertical integration, agglomeration, related-variety, business group

Internationalisation modes and determinants. The case of Italian automotive firms

The aim of this paper is to study the characteristics of the internationalisation process and to identify its determinants in a representative sample of firms in the Italian automotive chain. The main findings of an econometric analysis based on micro-evidence are that: a) the firms engage in complex modes of internationalisation; b) the individual firm's characteristics play a significant role; c) the firms located in the province of Turin have a clear localisation advantage, a sort of an 'industrial district' effect.Internationalisation, Firm Behaviour, Automotive Industry, Qualitative Choice Models

Do agglomeration and technology affect vertical integration? Evidence from Italian business groups

The aim of this paper is to analyse the role of technology and spatial agglomeration in decisions about vertical integration. It starts from the hypotheses that the business group, defined as a set of firms under common ownership and control, is the appropriate unit to delimit the firm’s boundary. We use information drawn from input-output tables to detect the presence of positive inter-industry exchanges and whether or not activities in a group are vertically related. Accounting for endogeneity problems, we estimate Probit and Linear Probability models to empirically investigate the role of technology and spatial agglomeration on vertical integration decisions. Consistent with property rights theory, our results show that the technology intensity of acquirers matters for backward integration choices and moreover, that agglomeration plays a role in vertical integration only when it operates jointly with technology.Business groups, spatial agglomeration, technology, vertical integration

Functional fragmentation and the location of multinational firms in the enlarged Europe

Despite the recent advances in the theory of location, the analysis of the role of services surrounding production activity has been largely neglected. This paper analyzes the co-location of a multinational firm's value chain in the enlarged European Union. Depending on its particular characteristics, each function (or activity) would favor different country characteristics. Opposing this dispersion force, vertical linkages between stages can encourage firms to co-locate different activities in the same country. We use recently collected individual firm data on almost 11 000 location choices for a 5 years period and 23 countries. We analyze the determinants of location choice for each activity, including sectoral and functional agglomeration variables. We also illuminate the co-location of functions at the firm level, specifically that of R&D and production.Functional fragmentation, vertical linkages, location choice.

Intra and Inter organisational determinants of electronic-based traceability adoption: evidences from the French agri-food industry

Traceability, the ability to trace the origin of products throughout the supply chain, has become an instrument to assure food quality and safety in agri-food chains. This process is organized within both institutional and market constraints, yet it integrates also a technological sphere marked by the unprecedented development of information and communication technologies. This paper analyses the factors influencing firms’ behaviour, with regards to adopting electronic-based traceability, in the French agri-food industry. These factors (microeconomic determinants) related to firms’ internal characteristics and the factors related to their environment. We use data from the ICT and Electronic Commerce survey from 2002, carried out by the French National Institute of Statistics (INSEE). A Probit type model is used, which allow us to take into account the firm’s determinants for its organisational choice, differentiating from those adopting (or not) an electronic-based traceability tool. Our main results show that the choices of electronic-based traceability depend on and interact with their own organizational characteristics and those of their competitive, industrial and local environment. Traceability technologies evidence the complementarities between organisational and technological practices. Large industrial firms known for their established identity and a brand image seem distant from standard traceability practices, contrarily to agribusinesses, which are subjected to regulations and look forward to use traceability for both complying with their downstream contracts and add value to their regional specificities.Traceability, Technology adoption, Agri-food industry, Agribusiness, Food Consumption/Nutrition/Food Safety,

Organization and structure of the chain in the Integrated Projects of Food Chain in Basilicata region: the effects on the new rural dynamics

The introduction of the Integrated Projects of Food Chain requires the development of models capable of interpreting the dynamics of vertical and horizontal coordination between agents and the definition of the issues that most affect the ability of professionals to provide value added to goods and products to acquire in exchange a competitive advantage. With reference to the Basilicata region, the production structure of the region and the recent development of the Integrated Projects of Food Chain, this research has developed a new model of territorial organization of rural development. Now connect a new food chain model that combines theories of productivity, typical of contract economic, with those of social welfare and environmental economics: multifunctionality and biodiversity related to the needs of income and efficiency of companies in various stages of the food chain classic, in a context in which planning consultation is major determinant of local and regional development.Food Chain, Rural Development, Integrated Project of Food Chain., Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Food Consumption/Nutrition/Food Safety, Labor and Human Capital,

New insights on the role of location advantages in international innovation

This paper takes a closer look at the role of location advantages in the spatial distribution of MNE R&D activity. In doing so, we have returned to first principles by revisiting our understanding of L and O advantages and their interaction. We revisit the meaning of L advantages, and offer a succinct differentiation of L advantages. We emphasise the importance of institutions, and flesh out the concept of collocation L advantages, which play an important role at the industry and firm levels of analysis. Just because a country possesses certain L advantages when viewed at a macro-level, does not imply that these are available to all industries or all firms in that location without differential cost. When these are linked to the distinction between location-bound and non location-bound O advantages, and we distinguish between MNEs and subsidiaries it allows for a clearer understanding of the MNE's spatially distributed activities. These are discussed here in the context of R&D, which - in addition to the usual uncertainties faced by firms - must deal with the uncertainties associated with innovation. Although prior literature has sometimes framed the centralisation/decentralisation, spatial separation/collocation debates as a paradox facing firms, when viewed within the context of the cognitive limits to resources, the complexities of institutions, and the slow pace of the evolving specialisation of locations, these are in actuality trade-offs firms must make.FDI, foreign investment, direct investment, multinationals, transnational corporations, MNEs, eclectic paradigm, collocation, locational advantage, country specific advantages

Service Implementation Framework in Manufacturing Firms: A Case Study

The culture and the operational methods of service management have become a formidable competitive weapon even for manufacturing firms. The term "service factory" has been proposed for identifying that particular integration of products and services, achieved by the excellent manufacturing firm, where "service is a multidimensional concept". The creation of a service factory necessarily implies a radical change in the operational and organizational characteristics of the firm. In order to support manufacturing firms in adopting a service strategy, it is relevant on the one hand to identify the bundle of services which have to be provided for the customers and, on the other hand, to understand the implications for firm management model. As regards the first point, the paper proposes a framework which classifies the services along with two dimensions: Timedimension and target-dimension. The proposed framework is of interest for manufacturing firms because it allows a better recognition of services that are more perceptible for the customers. In the second part of the paper, authors discuss the implications of a service strategy adoption on the management model of manufacturing firms. In order to carry out this analysis, authors propose a model that combines four service dimensions with three decision-making categories (Organization, Methodologies and Technologies). In the end, the proposed framework has been applied in a sample of Italian hot water heater manufacturers and a case study analysis has been carried out

How emergence conditions of technological clusters affect their viability? Theoretical perspectives on cluster lifecycles

The widely studied concept of clusters has been usually treated as pre-established and successful structures. We argue that clusters are not pre-established but emerge through a double competition process of technological and regional nature. Moreover, faced to a changing environment they are not always successful. Their long-term evolution depends on their viability capacities. We show that viability is dependent on the emergence conditions, because different forms of emergence create clusters with different structures.cluster life cycle, emergence, viability, networks

Smallholder Participation in Agricultural Value Chains: Comparative Evidence from Three Continents

Supermarkets, specialized wholesalers, and processors and agro-exporters’ agricultural value chains have begun to transform the marketing channels into which smallholder farmers sell produce in low-income economies. We develop a conceptual framework through which to study contracting between smallholders and a commodity-processing firm. We then conduct an empirical meta-analysis of agricultural value chains in five countries across three continents (Ghana, India, Madagascar, Mozambique, and Nicaragua). We document patterns of participation, the welfare gains associated with participation, reasons for non-participation, the significant extent of contract non-compliance, and the considerable dynamism of these value chains, as farmers and firms enter and exit frequently.