Innovativeness,offshoring and black economy decisions. Evidence from Italian manufacturing firms |
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| Institution: | 1. University of Bari, Department of Economics, Italy;2. LUMSA, University of Rome, Department of Economic and Political Sciences and Modern Languages, Italy;1. Department of Management, Inje University, Gimhae City, South Korea;2. Fund and Pension Division, Korea Capital Market Institute, Seoul, South Korea;3. Yonsei School of Business, Yonsei University, Seoul, South Korea;1. Technische Universität München, Department of Financial Management and Capital Markets, Arcisstrasse 21, 80333 Munich, Germany;2. Georg-August-University Goettingen, Chair of Management and Control, Platz der Göttinger Sieben 3, 37073 Göttingen, Germany;3. Phillips-Universität Marburg, Institute of Management Accounting and Marburg Centre for Institutional Economics (MACIE), Am Plan 1, 35032 Marburg, Germany;1. Department of Business Studies, Uppsala University, Sweden;2. CER, Department of Economic Sciences and Law, Mid Sweden University, Sundsvall, Sweden;3. Dalarna University College, Falun, Sweden;1. University of Seville (Spain), Avda San Francisco Javier s/n, 41018 Seville, Spain;2. University of Seville (Spain), Avda Ramón y Cajal, 1, 41018 Seville, Spain |
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| Abstract: | Following recent models in international trade this paper examines the characteristics that businesses should possess to pursue internationalization strategies. We do this in the peculiar context of Italy, the G-7 country with the largest share of the black economy in GDP. Specifically, we posit that Italian manufacturing firms may use three strategies to counter the competitive threats by emerging economies: (i) improve the innovative content of their products (ii) venturing into offshoring, or, alternatively, (iii) entering the black economy. We estimate the impact of these moves with firm-level data drawn from two waves of the Italian Manufacturing Survey (IMS) covering a six-year period (1998–2003). We find that offshoring firms are larger, more innovative, have higher capital/labour ratio and are located in provinces where the share of the black economy is lower. Firms belonging to provinces in which the share of the black economy is larger are less likely to choose the internationalization mode. The offshoring-black economy nexus bears relevant policy implications. In particular, vis-à-vis their offshoring companions, firms choosing to enter the black economy may be producing negative spillover effects by lowering productivity and the propensity to innovate. |
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| Keywords: | Empirics of global sourcing Globalization Offshoring Shadow economy |
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