The Impact of Vertical Integration and Outsourcing on Firm Efficiency: Evidence from the Italian Machine Tool Industry

In this paper we made use of an econometric approach to efficiency analysis in order to capture the role of vertical integration and outsourcing on firm's efficiency. Vertical integration is considered an indicator of structure, while outsourcing represents the process of its change. We consider inefficiency measures as indicators of organizational heterogeneity, related to the firm's choices regarding the phases of the production process that are under its control. We find support for the hypothesis of a relationship between vertical integration and efficiency. The results on outsourcing activity, and in particular the interaction between outsourcing and vertical structure, indicate that heterogeneous patterns, far from tending to cancel out each other as a consequence of common external changes, are reinforcing. Moreover, the sensitivity of inefficiency variance to the cycle, indicate that different firms may have different dynamic properties

The imperfect hiding : some introductory concepts and preliminary issues on modularity

In this work we present a critical assessment of some problems and open questions on the debated notion of modularity. Modularity is greatly in fashion nowadays, being often proposed as the new approach to complex artefact production that enables to combine fast innovation pace, enhanced product variety and reduced need for co-ordination. In line with recent critical assessments of the managerial literature on modularity, we sustain that modularity is only one among several arrangements to cope with the complexity inherent in most high-technology artefact production, and by no means the best one. We first discuss relations between modularity and the broader (and much older within economics) notion of division of labour. Then we sustain that a modular approach to labour division aimed at eliminating technological interdependencies between components or phases of a complex production process may have, as a by-product, the creation of other types of interdependencies which may subsequently result in inefficiencies of various types. Hence, the choice of a modular design strategy implies the resolution of various tradeoffs. Depending on how such tradeoffs are solved, different organisational arrangements may be created to cope with ‘residual’ interdependencies. Hence, there is no need to postulate a perfect isomorphism, as some recent literature has proposed, between modularity at the product level and modularity at the organisational level

Vertical Integration and Efficiency: an application to the Italian Machine Tool Industry.

This paper analyzes the relationship between firm efficiency and vertical integration in the Italian machine tool (MT) industry. A theoretical model of entry and competition within an industry has been set up. In this model firms can choose either to be vertically integrated or not: the most efficientfirms self-select in being vertically integrated, while less efficientfirms prefer a disintegrated structure and they both coexist in equilibrium. In the second part of the paper the relationship between efficiency and vertical integration has been tested using a stochastic frontier framework in an novel panel dataset including around 500 MT builders. The theoretical prediction is confirmed: outsourcing seems a rational choice for less efficient firms to make positive operating profits and stay in the market; on the other hand, more efficient firms exploit their efficiency advantage to control a greater part of the production chain, possibly benefiting from greater coordination among different phases and tailored intermediate inputs.vertical integration; technical efficiency; firm heterogeneity; heteroskedastic frontier model

Simplified preferences, voting, and the power of combination.

In this paper we interpreted the decision to vote for a particular party as a process of delegation to decision makers having a simplified system of preferences. Each person in a population votes for the political party that place priority on one or more issues that they consider important. Moreover, on the basis of a survey on preferences of population, we have simulated a delegation procedure which chart the selection process of a particular party. Finally, making use of noncommutative harmonic analysis, we decomposed the delegation function, and isolated the effect of a particular affinity, or a combination of either the pair of items that characterize a party. We used noncommutative harmonic analysis as an application of some results obtained by Michael E. Orrison and Brian L. %%@ Lawson in relation to spectral analysis applied in voting in political committees.

The imperfect hiding: Some introductory concepts and preliminary issues on modularity.

In this work we present a critical assessment of some problems and open questions on the debated notion of modularity. Modularity is greatly in fashion nowadays, being often proposed as the new approach to complex artefact production that enables to combine fast innovation pace, enhanced product variety and reduced need for co-ordination. In line with recent critical assessments of the managerial literature on modularity, we sustain that modularity is only one among several arrangements to cope with the complexity inherent in most high-technology artefact production, and by no means the best one. We first discuss relations between modularity and the broader (and much older within economics) notion of division of labour. Then we sustain that a modular approach to labour division aimed at eliminating technological interdependencies between components or phases of a complex production process may have, as a by-product, the creation of other types of interdependencies which may subsequently result in inefficiencies of various types. Hence, the choice of a modular design strategy implies the resolution of various tradeoffs. Depending on how such tradeoffs are solved, different organisational arrangements may be created to cope with 'residual' interdependencies. Hence, there is no need to postulate a perfect isomorphism, as some recent literature has proposed, between modularity at the product level and modularity at the organisational level.

The Impact of Vertical Integration and Outsourcing on Firm Efficiency: Evidence from the Italian Machine Tool Industry.

In this paper we made use of an econometric approach to efficiency analysis in order to capture the role of vertical integration and outsourcing on firm's efficiency. Vertical integration is considered an indicator of structure, while outsourcing represents the process of its change. We consider inefficiency measures as indicators of organizational heterogeneity, related to the firm's choices regarding the phases of the production process that are under its control. We find support for the hypothesis of a relationship between vertical integration and efficiency. The results on outsourcing activity, and in particular the interaction between outsourcing and vertical structure, indicate that heterogeneous patterns, far from tending to cancel out each other as a consequence of common external changes, are reinforcing. Moreover, the sensitivity of inefficiency variance to the cycle, indicate that different firms may have different dynamic properties.vertical integration; outsourcing; technical efficiency; double heteroskedastic model

Blame the parents? The association between parental longevity and successful ageing

Research has suggested that children of long-lived parents might age more successfully than children of short-lived parents. The aim of this study is to contribute further to the understanding of the association between parental longevity and offspring’s successful ageing. We used data from Wave one of the English Longitudinal study of ageing (ELSA) to investigate the association between three measures of parental longevity and the respondents’ cognitive and physical functioning, self-reported health and several chronic diseases. We found that parental lifespan, especially mother’s lifespan, is positively associated with cognitive functioning at older age. Parental lifespan and mother’s lifespan were also found to be associated with a decreased likelihood of occurrence of some chronic diseases such as pulmonary disease, coronary heart disease, hypertension and poor health.age/aging, cognitive functioning, longevity, parental lifespan, physical functioning, self-reported chronic disease, self-reported health

Stochastic learning in co-ordination games : a simulation approach

In the presence of externalities, consumption behaviour depends on the solution of a co-ordination problem. In our paper we suggest a learning approach to the study of co-ordination in consumption contexts where agents adjust their choices on the basis of the reinforcement (payoff) they receive during the game. The results of simulations allowed us to distinguish the roles of different aspects of learning in enabling co-ordination within a population of agents. Our main results highlight: 1. the role played by the speed of learning in determining failures of the co-ordination process; 2. the effect of forgetting past experiences on the speed of the co-ordination process; 3. the role of experimentation in bringing the process of co-ordination into an efficient equilibrium

Generalised and abdominal obesity and risk of diabetes, hypertension and hypertension–diabetes co-morbidity in England

Objectives To look at trends in generalised (body mass index (BMI) ≥30 kg m–2) and abdominal (waist circumference (WC) >102 cm in men, >88 cm in women) obesity among adults between 1993 and 2003, and to evaluate their association with diabetes, hypertension and hypertension–diabetes co-morbidity (HDC) in England. Design Analyses of nationally representative cross-sectional population surveys, the Health Survey for England (HSE). Subjects Non-institutionalised men and women aged ≥35 years. Measurements Interviewer-administered questionnaire (sociodemographic information, risk factors, doctor-diagnosed diabetes), measurements of height and weight to calculate BMI. WC and blood pressure measurements were taken by trained nurses. Results Generalised obesity increased among men from 15.8% in 1993 to 26.3% in 2003, and among women from 19.3% to 25.8%. Abdominal obesity also increased in both sexes (men: 26.2% in 1993 to 39.0% in 2003; women: 32.4% to 47.0%). In 1994, 1998 and 2003, generalised and abdominal obesity were independently associated with risk of hypertension, diabetes and HDC. The odds of diabetes associated with generalised obesity in 1994, 1998 and 2003 were 1.62, 2.26 and 2.62, respectively, in women and 1.24, 1.82 and 2.10, respectively, in men. Similar differences were observed for hypertension and HDC. Men and women with abdominal obesity also showed a higher risk for diabetes, hypertension and HDC than those with a normal WC. Conclusions If current trends in obesity continue then the risk of related morbidities may also increase. This will impact on cardiovascular disease morbidity and mortality, with cost implications for the health service. Therefore there is an urgent need to control the epidemic of obesity

Shortlisting by Incomplete Descriptions: The Power of Combination.

In this paper we make use of a particular technique of data analysis to empirically study the effect of joint attributes presentation in a multi-step process of choice, in which consumers first use a simple method for shortlisting, then proceed with a closer inspection of a restrict number of alternatives. Shortlisting is based on an incomplete description of the attributes of an alternative. We focus, in particular, on the presentation couples of attributes.x10The mathematical framework we used is the generalized spectral analysis. We tested this method on data collected through an ad hoc survey. Thanks to this powerful machinery we were able to identify the attraction single attributes have, from the effect of their combination.x10The use of generalized spectral analysis to decompose data on preferences is totally new. The decomposition allows us to underline two effects: the first and second order effect.x10The first order effect measures the average attraction that a single feature has when it is coupled with a second one. The second order effect detects the positive (or negative) power of combination of two coupled attributes. We present here a particular case, the choice of a car, among the ones we studied, to show how the method can be used, and its power. A particular emphasis will be given to gender differences in the evaluation of car attributes in the choice process.