Production Offshoring and the Skill Composition of Italian Manufacturing Firms: A Counterfactual Analysis

This work explores the effects of cross-border relocation of production on the skill composition of Italian manufacturing firms. Its aim is to assess if the firms’ strategy to offshore production activities towards cheap labor countries determines a bias in the relative employment of skilled versus unskilled workers. Using a balanced panel of firm-based data across the period 1995-2003, we test this skill-bias hypothesis by means of a counterfactual experiment in which we employ a difference-in-differences propensity score matching estimator in order to control for selectivity bias without relying on a specific functional form of the relations of interest. In line with the literature, our results point to confirm a general, although weak, skill bias effect of production offshoring on the labor-force composition of Italian manufacturing: in particular, we find that firms farming out production stages in 1998-2000 show an upward shift in the skill ratio with respect to the counterfactual of firms not moving their production abroad. However, when we look at the single components of the skill ratio, we find that the skill bias effect is primarily driven by a fall in the employment of production workers, while a weak or not significant effect is found with respect to the employment of skilled personnel.Production Offshoring, Skill Bias, Difference-in-Differences, Propensity

Production offshoring and the skill composition of Italian manufacturing firms: a counterfactual analysis

In this work we explore how the international outsourcing of production (offshoring) impacts the skill composition of Italian manufacturing firms. In particular, our aim is to assess if the choice to offshore production activities to cheap-labour countries implies a bias in the employment of skilled workers relative to unskilled workers. Using a balanced panel of firms across the period 1995-2003, we set up a counterfactual analysis in which, by using a difference-in-differences propensity score matching estimator, we compare the dynamics of skill demand for treated and control firms while addressing the possible problem of selection bias. Our results point to identify a "potential" skill bias effect of production offshoring. In particular, we find that treated firms tend to show an upward shift in the skill ratio with respect to the counterfactual sample, but coefficients are not significantly different from zero. When we look at the elements of the skill ratio separately, we find that the skill bias is significantly driven by a fall in the employment of production workers (blue collars), rather than by the increase in the employment of nonproduction workers (white collars), thus providing further evidence on the unskilled labour-saving nature of international outsourcing.production offshoring, skill-bias, difference-in-differences, propensity score matching

Innovation, Workers Skills and Industrial Relations: Empirical Evidence from Firm-level Italian Data.

The shifting of labour demand towards relatively more skilled workers has been a hot issue in the economic field for many years. A consolidated explanation for the upskilling phenomenon is that technological-organisational changes have driven the labour demand with detrimental consequences for less skilled workers (skill-biased technological-organisational change). In order to upgrade the skill workforce the firm has at least two main channels at its disposal: the external labour market strategy, mainly based on hiring and firing mechanisms; the internal labour market strategies, which improve the skill base of the employees through training activities. The main objective of the present work is to verify the relations between innovative strategies and both the workforce composition and the training activities, within an integrated framework that also leads us to consider the role of specific aspects of the industrial relations system. The firm level analysis is based on original datasets which include data on manufacturing firms for two Italian local production systems, located in the Emilia-Romagna region. The results suggest that the firms use both the two channels to improve their skill base, which is actually related to the innovation activities, although there is weak supporting evidence of the use of external labour markets to upgrade the workforce skills: the upskilling phenomenon seems to be associated to specific innovative activities in the technological sphere, while specific organisational aspects emerge as detrimental for blue collars. On the side of internal labour market strategies the evidence supports the hypothesis that innovation intensity induce the firms to implement internal procedures in order to upskill the workforce, confirming the importance of internal labour market strategies. Moreover, we have recognized the important role of firm level industrial relations in determining the training activities for the blue collar workers.technological change; organisational change; industrial relations; skills

Production offshoring and the skill composition of Italian manufacturing firms A quasi-experimental analysis

This work explores the effects of production offshoring on the workforce skill composition of manufacturing firms. Its aim is to assess if the firms’ strategy to offshore production activities determines a bias in the in-house employment of labor in favour of high-skilled workers. Using three repeated cross-sections of firm-level data over the period 1995-2003, we employ a nonparametric analysis based on propensity score matching thanks to which we can control for selectivity bias without relying on a specific functional form of the relations of interest. We test the effect of production offshoring on the workforce skill composition of manufacturing firms by employing different measures of skills by occupational title. Our results point to a weak, but down-skilling, impact of delocalization on the labor composition of Italian manufacturing: in particular, we find that firms that farmed out production activities in 1998-2000 generally employ a lower share of skilled, non manual, workers with respect to the counterfactual of nondelocalizing firms. These results seem to be in line with an idea of defensive offshoring. However, despite the usual findings that mainly stress the negative impact of delocalization on low-skilled workers, we find here that middle-managers category is the most affected. Such evidence may find a twofold explanation: on the one hand, skilled workers can decline more than unskilled workers because of a substitution effect that is driven by the will of reducing not only redundant activities, but also intermediate skills-intensive activities as control and coordination for which middlemanagers are employed for. On the other hand, skilled workers may decline in absolute terms, because of a quantity effect that occurs when firms decide to transfer managerial staff in order to coordinate and supervise the activities shifted abroad

Production offshoring and the skill composition of Italian manufacturing firms: a non-parametric analysis

This work explores the effects of production offshoring on the workforce skill composition of manufacturing firms. Its aim is to assess if the firms’ strategy to offshore production determines a domestic employment bias in favor of high-skilled workers. Using three repeated cross-sections of firm-level data over the period 1995-2003, we test the effect of production offshoring on the skill composition by looking at different measures of skills by occupational title and by employing a quasi-experimental analysis based on propensity score matching. Our results point to a modest,and in some cases down-skilling, impact of offshoring on the skill composition of Italian manufacturing: in particular, we find that firms that farmed out production activities in 1998-2000 generally employ a lower share of skilled, non manual, workers with respect to the counterfactual of non-delocalizing firms. Despite the usual findings about the negative impact of international delocalization on low-skilled employment, we find that middle-managers are the most affected category. Such evidence may find a twofold explanation: on the one hand, skilled workers can decline more than unskilled workers because of a substitution effect that is driven by the will of reducing not only redundant activities, but also to outsource complementary skill-intensive activities such as control and coordination for which middle-managers are employed for. On the other hand, skilled workers may decline in absolute terms, because of a quantity effect that occurs when firms decide to transfer managerial staff in order to coordinate and supervise the activities shifted abroad

Outsourcing and firm productivity: evidence for an Italian local production system

The paper investigates empirically the impact that outsourcing strategies have on the labour productivity of firms embedded in a local production system characterized by idiosyncratic techno-economic and organizational features. A diachronic cross-section econometric model of the productivity impact of outsourcing is applied to a sample of firms based in the local production system (LPS) of Reggio Emilia (RE) (in Emilia Romagna, Italy). The application confirms some of the results the empirical literature reports for other no or less context specific empirical applications, in particular their dependency on the kind of outsourced activities, the internationalization of the outsourcing firm and time horizon of the productivity effects. On the other hand, when the actual extent at which the different kinds of activities are outsourced is retained, important exceptions to these results are obtained: the positive impact of the externalization of manufacturing activities is the most relevant and the most consistent with the district nature of the investigated LPS.outsourcing, productivity, transaction costs, industrial relations, innovation

Shared pain, half a pain? ‘Overcoming’ barriers to innovation through cooperation

Trabajo presentado a la EU-SPRI Conference: "Science and Innovation Policy: Dynamics, Challenges, Responsibility and Practice", celebrada en Manchester (UK) del 18 al 20 de junio de 2014.In recent empirical literature an increasing attention is devoted to the obstacles that hamper innovation, their impact on firms’ engagement in innovation and their effect on the propensity to innovate (e.g. Baldwin and Lin, 2002; Galia and Legros, 2004; Tiwari et al., 2008; Savignac, 2008; Iammarino et al., 2009; Mancusi and Vezzulli, 2010; Galia et al., 2012; Blanchard et al., 2013).Peer reviewe

Economic Crisis, Innovation Strategies and Firm Performance. Evidence from Italian Firm-level Data

Several empirical works have shown the robust and positive relation between growth and innovation at macroeconomic level and between firm economic performance and innovation at microeconomic level. However, the economists have had less opportunities to study such linkages during severe global downturns of the economic cycle. Moreover, the present disruptive economic downturn has forced the firms to implement survival strategies. One of such strategic behaviour regards the way of intervention on product and process areas through innovative actions. Focusing the attention on the micro level, the present work provides an empirical analysis on the basis of more than 500 Italian manufacturing firms located in Emilia-Romagna region, with the aim of disentangling the relations between pre-crisis innovation strategies and firm economic performance during the crisis as well as the linkages between the innovative actions taken to react to the recession's challenges and the economic performance in the recession. The results suggest the existence of strong relationships between past innovative activities and the capacity to react to the challenges brought by the crisis through innovative actions along product, process and organization/HRM dimensions, although the role of complementarities among past innovative activities does not emerge robustly. When the dependent variables are performance indicators the impact of pre-crisis innovation strategies emerges as robust for technological and organizational spheres, while intense innovative activities before the crisis on spheres like ICT, training and environment are detrimental for performances in the crisis. It seems that when the crisis hits those firms in a process of quite radical transformation and change, then the negative economic consequences of the recession are worse than in the case of firms on a more stable, less dynamic path.innovation strategies; economic crisis; firm performance

The Effect of Intrinsic and Extrinsic Motivations on Academics' Entrepreneurial Intention

This work investigates entrepreneurial intentions among academic scientists. Drawing from the literature on entrepreneurial behavior, it contributes to delineate the differences in motivations that are correlated with entrepreneurial intention to those that are considered to be linked to entrepreneurial behaviors. By disentangling the concept of motivations in its ultimately basic constructs of intrinsic and extrinsic motivations, we investigate how these two different types of motivations are related to the formation of entrepreneurial intention at the level of academic scientists. Through a survey conducted at the University of Ferrara—one of the leading universities in Italy in terms of technology transfer and scientific production—findings reveal that while academic entrepreneurial intention seems to be mostly driven by intrinsic motivations, the effect of extrinsic motivations, which are regarded as a main antecedent of entrepreneurial behavior among scientists, are largely mediated by academic positions, work environment and different combinations of these two factors. This work therefore highlights the importance of social norms in the investigation of entrepreneurial intention in academia

Backing environmental innovations through information technology adoption. Empirical analyses of innovation-related complementarity in firms

The paper tests empirically whether various types of Information and Communication Technologies (ICT) adoption and other innovation practices (techno-organisational change and training courses) are complementary inputs with respect to the adoption of specific environmental innovations (EI). The analysis is based on original survey data for a large industrial Italian region (Emilia-Romagna), which offer various views on ICT and EI relationships. This survey contains information on the adoption of environmental innovations and some detailed information on ICT issues and other technological-organisational processes. Our main findings suggest that, overall, complementarity does not seem to characterize the relationship between ICT and other innova-tion processes as a force behind environmental innovation, but some important exceptions emerge. Complementarities exists, for instance, between technological innovation and both adoption of ICT management systems and ICT for cooperation with clients. Interestingly, restricting the analysis to a sub-sample of more polluting firm, both complementarity and substitutability emerge more evidently