Global sourcing can increase firms' productivity via the quality upgrading of intermediates, but, because of the heterogeneity of suppliers, it also increases screening costs of final firms given the need to search for good suppliers. We build up a simple model to analyze these factors and show that large firms can better exploit the potential gains from quality upgrading. Moreover, we show that business & social networks make both the overall production and firms' profitability increase via the reduction in firms' unit screening costs. There are cumulative beneficial effects of these networks: thicker networks imply higher cost saving and thus further incentives to invest in network linkages. Finally, we sketch a possible extension of the model to analyze the choice of local vs. global sourcing strategies and how their differences, in terms of costs, suppliers' heterogeneity and degree of embeddedness in networks, affect firms' choices and their efficiency.

VITTUCCI MARZETTI, G., Tomasi, C., Segnana, M. (2010). Global sourcing and business networks: quality heterogeneity and firms' efficiency. In B. Dallago, C. Guglielmetti (a cura di), Local Economies and Global Competitiveness (pp. 242-256). Palgrave Macmillan [10.1057/9780230294967_13].

Global sourcing and business networks: quality heterogeneity and firms' efficiency

VITTUCCI MARZETTI, GIUSEPPE
;
2010

Abstract

Global sourcing can increase firms' productivity via the quality upgrading of intermediates, but, because of the heterogeneity of suppliers, it also increases screening costs of final firms given the need to search for good suppliers. We build up a simple model to analyze these factors and show that large firms can better exploit the potential gains from quality upgrading. Moreover, we show that business & social networks make both the overall production and firms' profitability increase via the reduction in firms' unit screening costs. There are cumulative beneficial effects of these networks: thicker networks imply higher cost saving and thus further incentives to invest in network linkages. Finally, we sketch a possible extension of the model to analyze the choice of local vs. global sourcing strategies and how their differences, in terms of costs, suppliers' heterogeneity and degree of embeddedness in networks, affect firms' choices and their efficiency.
Capitolo o saggio
Delocalization; Outsourcing; Heterogeneity; Business & social networks; Search costs
English
Local Economies and Global Competitiveness
Dallago, B; Guglielmetti, C
2010
978-1-349-32236-7
Palgrave Macmillan
242
256
VITTUCCI MARZETTI, G., Tomasi, C., Segnana, M. (2010). Global sourcing and business networks: quality heterogeneity and firms' efficiency. In B. Dallago, C. Guglielmetti (a cura di), Local Economies and Global Competitiveness (pp. 242-256). Palgrave Macmillan [10.1057/9780230294967_13].
open
File in questo prodotto:
File Dimensione Formato  
SSRN-id1534779.pdf

accesso aperto

Tipologia di allegato: Other attachments
Dimensione 236.52 kB
Formato Adobe PDF
236.52 kB Adobe PDF Visualizza/Apri

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/19276
Citazioni
  • Scopus 0
  • ???jsp.display-item.citation.isi??? 0
Social impact