, Volume 37, Issue 1, pp 47–63 | Cite as

Outsourcing versus integration at home or abroad and firm heterogeneity

  • Stefano Federico
Original Paper


This paper analyzes the location (at home or abroad) and the mode of organization (outsourcing versus integration) of intermediate inputs production, using data on a sample of Italian manufacturing companies and focusing on the role of firm heterogeneity. We find evidence of a productivity ordering where foreign integration is chosen by the most productive firms and domestic outsourcing is chosen by the least productive firms; firms with medium-high productivity choose domestic integration, firms with medium-low productivity choose foreign outsourcing.


International outsourcing Foreign direct investment Intra-firm trade Productivity 

JEL Classification

F12 F23 L22 



I am grateful to an anonymous referee, Alfonso Rosolia, Luigi Federico Signorini, Marcel Smolka, Lucia Tajoli, Roberto Tedeschi, Davide Vannoni and participants to the 10th ETSG Conference in Warsaw, the 2nd FIW Research Conference “International Economics” in Vienna, the Centro Studi Luca d’Agliano Conference on “Innovation, Internationalization and Global Labor Markets” in Turin and the INFER Workshop on “Firm and Product Heterogeneity in International Trade” in Brussels for their useful comments. I am also grateful to Alessandra De Michele for editorial assistance. The views expressed in this paper are those of the author and do not necessarily reflect those of the Bank of Italy.


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Copyright information

© Springer Science+Business Media, LLC. 2009

Authors and Affiliations

  1. 1.Banca d’ItaliaRomeItaly

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