Corporate governance, organization and the firm co operation and outsourcing in the global economy

Corporate Governance, Organization and the Firm NEW PERSPECTIVES ON THE MODERN CORPORATION Series Editor: Jonathan Michie, Professor of Management and Director and Head, Birmingham Business School, University of Birmingham, UK The modern corporation has far reaching influence on our lives in an increasingly globalised economy This series will provide an invaluable forum for the publication of high quality works of scholarship covering the areas of: ● ● ● ● ● corporate governance and corporate responsibility, including environmental sustainability human resource management and other management practices, and the relationship of these to organisational outcomes and corporate performance industrial economics, organisational behaviour, innovation and competitiveness outsourcing, offshoring, joint ventures and strategic alliances different ownership forms, including social enterprise and employee ownership intellectual property and the learning economy, including knowledge transfer and information exchange Titles in the series include: Corporate Governance, Organization and the Firm Co-operation and Outsourcing in the Global Economy Edited by Mario Morroni The Modern Firm, Corporate Governance and Investment Edited by Per-Olof Bjuggren and Dennis C Mueller The Growth of Firms A Survey of Theories and Empirical Evidence Alex Coad Corporate Governance, Organization and the Firm Co-operation and Outsourcing in the Global Economy Edited by Mario Morroni Department of Economics, University of Pisa, Italy NEW PERSPECTIVES ON THE MODERN CORPORATION Edward Elgar Cheltenham, UK Northampton, MA, USA â Mario Morroni 2009 All rights reserved No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK Edward Elgar Publishing, Inc William Pratt House Dewey Court Northampton Massachusetts 01060 USA A catalogue record for this book is available from the British Library Library of Congress Control Number: 2008939737 ISBN 978 84720 820 Printed and bound in Great Britain by MPG Books Ltd, Bodmin, Cornwall Contents List of figures List of tables List of contributors Acknowledgements Introduction: Organizational variety and economic performance Mario Morroni PART I THEORETICAL ASPECTS The stakeholder corporate governance view revisited Mirella Damiani The governance of the knowledge-intensive firm in an industry life cycle approach Jackie Krafft and Jacques-Laurent Ravix Types of complementarity, combinative organization forms and structural heterogeneity: beyond discrete structural alternatives Anna Grandori and Santi Furnari Oliver Williamson and the logic of hybrid organizations Claude Ménard Organization of firms, knowing communities and limits of networks in a knowledge-intensive context Patrick Cohendet and Patrick Llerena PART II vii viii x xii 19 48 63 87 104 APPLIED ANALYSES Short-term gain, long-term pain? Implications of outsourcing for organizational innovation and productivity Andreas Reinstaller and Paul Windrum The general profile of the outsourcing firm: evidence for a local production system of Emilia Romagna Massimiliano Mazzanti, Sandro Montresor and Paolo Pini v 123 148 vi 10 Contents Technical capital and social capital in outsourcing networks: complements or substitutes? Rafael Pardo and Ruth Rama Manufacturing abroad while making profits at home: the Veneto footwear and clothing industry Carlo Gianelle and Giuseppe Tattara Index 181 206 235 Figures 1.1 3.1 3.2 6.1 7.1 7.2 7.3 7.4 10.1 10.2 10.3 10.4 10.5 10.6 Basic conditions, decision making, coordination and competitiveness Governance of firms along the different stages of the ILC The governance of the knowledge-intensive firm along the ILC Ranking of activities of the firm (distance from ‘core competence’) Variety of activities being outsourced Interdependence and modularity in organizational architectures Splitting and enrichment as strategies in organizational redesign Simulation runs Employment in clothing according to firm type in Veneto Value added at constant prices in textile-clothing-footwear and employment in Veneto Turnover in four companies (in thousands of euros, current prices) EBITDA in four companies (thousands of euros, current prices) Impact of relocation Residuals of the regression of logTurnover and logEBITDA over controls vii 53 59 117 125 133 135 141 212 213 217 218 220 221 Tables 2.1 2.2 Market for corporate control and executive turnover Holding period of raiders’ purchases: mean, median and holding period distribution in some European countries (1990–2001) 2.3 Flat CEO’s compensation and stakeholder society: variable remuneration as percentage of total remuneration in some countries 2.4 Comparative features of labour relations in some countries: stability of employment, wage setting system and wage spread in Coordinated Market Economies (CME) and Liberal Market Economies (LME) 2.5 Comparative features of corporate governance in the 1990s in Coordinated Market Economies (CME) and Liberal Market Economies (LME) Concentration of ownership and of voting rights, role of financial institutions and inter-firm relations 2.6 Remuneration and incidence of incentive systems in Coordinated Market Economies (CME) and Liberal Market Economies (LME) 2.7 Control rights and payoff rights of employees in some OECD countries 4.1 Organizational elements and practices 4.2 Types of relationships among organizational elements 4.3 Equifinal organizational formulas (by function and contingency) 7.1 Drivers of outsourcing by rank 7.A1 Parameter values used to calibrate the model 8.1 Expected outsourcing correlations: organizational level 8.2 Expected outsourcing correlations: production level 8.3 Expected outsourcing correlations: industrial level 8.4 Expected outsourcing correlations: innovation level 8.5 Reggio Emilia: industrial structure of the firm population (2001) 8.6 Reggio Emilia: outsourcing firms of the sample by activity (1998–2001) viii 28 29 30 33 34 36 40 70 73 82 126 145 151 155 157 160 164 165 Tables 8.7 8.8 9.1 9.2 9.3 Regression results: the four different levels of analysis Regression results: all levels of analysis Characteristics of the sample (N = 162) Correlations among the original variables Association between variables denoting networking activities and variables denoting technical capital 9.4 Canonical correlation analysis 9.5 Correlations between the VAR variables and the canonical variables of the WITH variables, and between the WITH variables and the canonical variables of the VAR variables 10.1 Structure of the production in an integrated and in a deverticalized firm 10.2 Effects of outsourcing on turnover 10.3 Effects of outsourcing on EBITDA 10.4 Net/gross effects of delocalization and fragmentation 10.5 Delocalization and the boundary of the firm 10.A1 Descriptive statistics of the companies included in the sample (2003) 10.A2 Limited and joint stock companies ix 170 175 190 195 196 197 198 214 222 223 226 227 230 231 Contributors Patrick Cohendet, BETA University Louis Pasteur, Strasbourg, France, and HEC Montréal, Canada Mirella Damiani, Department of Economics, Finance and Statistics, University of Perugia, Italy Santi Furnari, CRORA, Bocconi University, Milan, Italy Carlo Gianelle, Doctoral School, University of Siena, Italy Anna Grandori, CRORA, Bocconi University, Milan, Italy Jackie Krafft, University of Nice Sophia Antipolis, CNRS-GREDEG, France Patrick Llerena, BETA Université Louis Pasteur, Strasbourg, France Massimiliano Mazzanti, Department of Economics, Institutions and Territory, University of Ferrara, Italy Claude Ménard, University of Paris (Pantheon-Sorbonne), Paris, France Sandro Montresor, Department of Economics, University of Bologna, Italy Mario Morroni, Department of Economics, University of Pisa, Italy Rafael Pardo, Department of Economics, CSIC (Spanish National Research Council), Madrid, Spain Paolo Pini, Department of Economics, Institutions and Territory, University of Ferrara, Italy Ruth Rama, Department of Economics, CSIC (Spanish National Research Council), Madrid, Spain Jacques-Laurent Ravix, University of Nice Sophia Antipolis, CNRSGREDEG, France Andreas Reinstaller, Austrian Institute for Economic Research (WIFO), Vienna, Austria x 230 15 16 17 18 19 20 21 Applied analyses we consider relations with each foreign country (for example, Romania, Tunisia and China) as a single occurrence Some companies have several delocalized activities in various countries, set up in different years, involving various productive volumes In this survey we take into consideration the main delocalization event Negative values of the EBITDA, for which the logarithm does not exist, are treated as missing values See Heckman and Robb (1985) who suggests checking for the economic cycle The sales confidence index is sector specific The sectors and corresponding indexes are based on the three digits Ateco 2002 classification (codes: DB177, DB182 and DC193) It proved very difficult to obtain reliable information from the companies interviewed, concerning the gradualism through time involved in the delocalization process In the model presented by Reinstaller and Windrum (in Chapter in this book) outsourcing has a possible long-run negative effect on productivity growth because managers might lose competences that are crucial in providing further quality and cost improvements Closely reflecting our empirical results, they claim that short and longrun impacts of outsourcing can have the opposite sign and managers can, over the long run, be locked into low productivity growth trajectories Gereffi (1999) stresses that being part of a value chain at an international level means acquiring knowledge and therefore having a significant production upgrading APPENDIX Table 10.A1 Descriptive statistics of the companies included in the sample (2003) Firms in clothing sector Firms in footwear sector Average n of employees Average turnover (thousands of euros) Average EBITDA (thousands of euros) Firms with FDI Average n of observations per firm in the panel Average n of observations before relocation Average n of observations after relocation First ten countries of delocalization in order of importance: Romania China Tunisia Hungary Bulgaria Croatia Turkey Slovakia India Indonesia 40 (10 knitwear) 30 110 36.3 2.6 34 16.3 8.8 7.5 231 Source: 16 21 21 70 (8%) (23%) (30%) (30%) (9%) (100%) Companies 80 577 1472 3108 2494 7731 (1%) (8%) (19%) (40%) (32%) (100%) Employees Present sample (2003) Survey; Industrial Census, Istat, 2001 1–19 20–49 50–99 100–249 250 and more Total Employment class Table 10.A2 Limited and joint stock companies 858 356 131 69 16 1430 (60%) (25%) (9%) (5%) (1%) (100%) Companies 4971 10318 8892 10200 8340 42721 (12%) (24%) (21%) (24%) (19%) (100%) Employees Veneto (2001) 0.7 4.5 16.0 30.4 37.5 4.9 Companies 1.6 5.6 16.6 30.5 29.9 18.1 Employees Sample % over Veneto 232 Applied analyses REFERENCES Ádám, G (1971), ‘New trends in international business: worldwide sourcing and dedomiciling’, Acta Oeconomica, (3–4), 349–67 Baden, S (2002), ‘Trade policy, retail markets and value chain restructuring in the EU clothing sector’, PRUS working paper, no 9, university of susser, Bnghton, UK Barba 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internazionale: problemi di definizione e di misurazione Un’analisi per il settore del “Made in Italy”’, Economia e Politica Industriale, 103, 207–39 Stevanato, D (2004), ‘Fisco e delocalizzazione’, Economia e Società Regionale, 87 (3), 84–104 Tattara, Giuseppe (ed.) (2001), Il Piccolo che Nasce dal Grande, Milan, Italy: Franco Angeli Tattara, Giuseppe (2007), ‘Emerging hubs in Central-Eastern Europe, trade blocs and financial co-operation’, in A.K Bagchi and G.A Dymski (eds), Capture and Exclude: Developing Economies and the Poor in Global Finance, New Delhi, India: Tulika Books, pp 282–304 Index Abraham, K 156, 177 Adam, G 206 Aghion, P 116, 148 Agreement on Textiles and Clothing (ATC) 209 Ahuja, G 181, 184, 189, 199 Altenberg, L 144 Anderson, A.R 183, 184 Andrade, G 26 Antonelli, C 12, 126 Antonioli, D 163, 168, 169 Antras, P 150 Aoki, M 33, 54 Argyres, N 148, 150, 158, 159 Audretsch, D 50 Baake, P J 177 Baba, Y 200 Baden, S 209 Baker, G.P 21, 37 Baldwin, C.Y 129, 130 Baldwin, J.R 12 Barba Navaretti, G 227 Bartel, A 154 Baumol, W.J 25 Bebchuk, L.A 21, 36 Becattini, G 183 Becht, M 22, 48, 54 Becker, B E 43 Bénassy-Quéré, A 229 Bengtsson, L 126–7 Benson, J 158, 159, 162, 177 Bertrand, M 25 Best, M 176 Bianchi, M 12 Bigarelli, D 207 Blair, M.M 19, 38, 39, 42, 55 Bloom, N 13 Boland, R.J 73, 109 Bonaccorsi, A 12 Boolean Comparative Analysis 74–6 Bottazzi, G 12 Brown, J.S 118 Bruner, R.F 27 Brusco, S 183, 209 Brusoni, S 70, 113, 127, 132, 159, 177 Brynolfsson, E 144 Bugamelli, M 207 Burns, T 80 Cacciatori, E 148 Cainarca, G 79 Calantone, R 185 Calatrava, A 200 Castellani, D 227 Chandler, A.D 4, 6, 12, 131 Chatterjee, S 56 Chemia, G 27 Chilosi, A 42 Christensen, C.M 162 Christensen, J 55, 56 Clark, K.B 129, 130, 162 clothing industry 208–10 see also Veneto footwear and clothing industry international organization of 208–10 Coad, A 4, 12 Coase, R.H 88, 153 Coffee, J.C 39 Cohen, W.M 110, 159, 185 Cohendet, P 6, 9, 105, 118, 119 Coleman, J.S 183 Collopy, F 73 compensation rules 21 competence theory of firm (and) 114–17 cognitive steps 114–16 governance priorities 116 ranking of activities 116–17 complementarity, combinative organization forms and structural heterogeneity 63–86 235 236 contract/contracting 94–6 classical 95 hierarchies 95 hybrid modes of 94 neoclassical 95 contract law 96 cooperation vs collusion 22–8 coordinated market economies 31, 33 Corò, G 206 corporate entrepreneurship 57 corporate governance see stakeholder corporate governance view corporate governance reform (USA) 36 Sarbanes Oxley Act (2002) 37 Cowan, R 119 Crestanello, P 210, 211, 214, 229 Croci, E 27–8 Dalla Libera, P.E 210 Damiani, M 3, 8, 23, 35, 42, 60 de Kok, T.G 156 de Laat, P.B 181 Deavers, K 154 decision-making mechanisms 3, definition(s) of corporate governance 19–20 hybrid arrangements organization form 66 ownership of unique physical assets 19 social capital 183 trust within specific society 184 delayering of corporate hierarchies 21 delocalization 11, 227–8 Dietrich, M 60 Dillon, W.R 191 discrete structural alternatives see organization forms diverse governance systems, effect of on corporate performance diversity 111–12 Domberger, S 127, 148 Donaldson, T 55 Dopfer, K 13 Dosi, G 12, 60, 129, 159 Doty, H.D 66 Drazin, R 66 Drejer, J 125 Index dual structure of firm, theory of 111–17 and diversity 111–12 Duguid, P 118 Dyer, J.H 159, 189, 200 Earl, P.E 12 Ebers, M 87, 101 Economic Co-operation and Development, Organization for (OECD) Principles of Corporate Governance 38 Economic Institutions of Capitalism, The 87, 88, 89–91 Edlin, A 21 Edwards, J 34 Ellig, J 55 Emilia Romagna see outsourcing firm and outsourcing firm profile: Reggio Emilia employee(s) (and) decision-making 38 financial participation of 37 profit sharing 37 retention of 21 share ownership 35, 37 Equity Report (Towers Perrin) 35 European Commission 189, 211 European Patent Office 35 European Union (EU) 209 Faems, D 182, 185, 186, 199 Feenstra, R 228 Filatotchev, I 48 Finger, J.M 206 Fischer, K 34 Fischer, M.M 184, 185, 187, 189 Fiske, A.P 68, 84 Fiss, P.C 67, 84 FitzRoy, F.R 32 flexible specialization theory 187 Foray, D 119 Foss, N.J 12, 55, 56, 83, 116, 148, 188 Fransman, M 48, 54 Freeman, C 184 Freeman, R.B 22, 32, 39, 42 Fried, J.M 21, 36 Friesenbichler, K 4, 12 Fuller, L L 101 Index Furnari, S 3, 9, 63, 67, 68, 69, 74, 75–6, 78, 84 Furlotti, M 202 Gann, D 176 Garcia, R 185 Garnsey, E 13 Gellatly, G 12 Gemünden, H.G 201 Georgescu-Roegen, N 12 Gereffi, G 210, 229, 230 Gerlach, M 97, 98, 102 Germany 30–35, 37, 125, 206 National Federation of Labour Unions 30 Gianelle, C 11, 127–8, 216 Ginzburg, A 207 Giuri, P 12 globalization 206 Goldstein, M 191 Gomirato, E 207 Gompers, P 50 Gonzalez-Diaz, M 153, 167, 171, 176 Gordon, M.J 214 Gorg, H 165 Gort, M 50 Gorton, G 30, 31 Gospel, H 37 governance (and) cognitive coherence of firm 54–6 cognitive firm 55 corporate entrepreneurship 56 inadequacy of traditional agency problems 54–5 cooperation and control as related modes of 56–9 and creation/coordination of knowledge 56–7 control to endorse/reject innovative conjecture 58 of firms in industry life cycle (ILC) 49–51 firms along different stages of ILC 52, 53 mature firms in late stages of ILC 51 start-ups in early stages of development 50–51 of knowledge-intensive firms along ILC 58–9 237 governance inseparability 150–3 Grandori, A 3, 9, 63, 64, 67, 68, 69, 73, 74, 75–6, 78, 80, 84 Granovetter, M 149, 183 Graziani, G 207 Greenfield, H.I 125 Gresov, C 66 Griliches, S 165 Grimshaw, D 127, 132 Grossman, S.J 19, 23, 148, 150 Gugler, K 22 Gulati, R 181, 186 Hagedoorn, J 184 Hall, B.J 21 Hall, P.H 31, 33, 35 Hamal, G 167 Hanley, A 165 Hanson, H 127 Harrison, B 153, 187 Hart, O.D 19, 23, 50, 148 Häusler, J 184, 186 Heckman, J.J 221, 230 Hellwig, M 22, 24 Helpman, E 148, 150 Henderson, R.M 162 Herfindhal index of revenues 168 Hernandez-López, E 23 Hinks, J 127 Hitt, L M 144 Hodgson, G M 12, 13 Holl, A 186, 187, 188, 199 Holmstrom, B 20, 29, 35, 42 Hölzl, W 4, 12, 131 hostile bids 22–7 as breach of trust 27 Houseman, S.N 156 Hsiao, C 219 human resource management (HRM) 38 Huselid, M A 43 hybrid arrangements see hybrid organizations hybrid organizations 3–4, fundamental properties of 92–9 adaptation mode/adaptive mechanisms 96–8 distinctive contract law 94–6 existence 93–4 incentives 98–9 238 Index logic of 87–103 emergence of a theoretical entity 88–92 Economic Institutions of Capitalism, The (1985) 89–91 Markets and Hierarchies (1975) 88–9, 92 Mechanisms of Governance, The (1996) 91–2 see also hybrid arrangements hybrids see hybrid organizations Hyman, R 158 Icahn, C 26 Ichniowski, C 66 ICTs 123–8, 131–3, 140, 142–3 adoption of new 124 internet-based 10, 132 internet-based networking 123 and outsourcing 131–2 Ieronimo, N 158, 159, 162, 177 incentives 21 and labour relationships 28–38 industry life cycle (ILC) 48–62 information and communication technology see ICTs Information Intensive Production System (IIPS) 105, 106–8 Intel 20–21 Internal Organization, Cooperative Relationships among Firms and Competitiveness workshop (2007) interpretative framework 1–8 Italy see also clothing industry and Veneto footwear and clothing industry Intermediate Census (1996) of National Institute of Statistics 163 Ittner, C.D 21, 36 Jack, S.L 183, 184 Jackson, G 33, 43 Jacobides, M 148 Japan 31, 32–3, 37, 125 Jensen, M.C 23, 26, 29–30, 50 Joskow, P 101 Kamien, M 177 Kaminski, B 206 Kaplan S 27, 50 Kelley, M.R 153, 187 Kilduff, M 80 Kilicaslan, Y 149, 154, 158, 176, 177 Kimura, F 187, 200 Klein, B 96 Klein, P 55 Klein, S 55 Kleinknecht, A 42 Klepper, S 50 Knack, S 184 Knight, F H 13 knowing communities 108–18 as active units of specialization 108–10 as contributing to firm’s absorptive capabilities 110–11 Linux open source 108 knowledge communities 9–10 knowledge-based economy 109 knowledge-intensive business services (KIBS) 123, 125–6, 131–2, 143–4 knowledge-intensive economy 111 knowledge-intensive firms governance of 48–62 see also governance Knudson, T 13 Kogut, B 106, 182, 188, 201 Kotabe, M 185 Krafft, J 3, 8, 60 Kraft, K 32 Kreps, D.M 27 Kruse, D 36 labour regulation rules 33 Langlois, R.N 116, 129, 148, 159, 162 La Porta, R 42 Laursen, K 66 Lavie, D 181, 186 Lawrence, P 64 Lazonic, W 48, 54 Lechevalier, S 12 Lee, S H 42 Leffler, K 96 Lehmann, E 50 Leonard-Barton, D 159 Lerner, J 50 Levinthal, D.A 5, 110, 159, 185 Index liberal market economics 35 Liebeskind, J.P 148 , 158, 159 Linux open source community 108 Llerena, P 6, 9, 105, 118, 176 Llewellyn, K 96–7 Loasby, B.J 7, 12, 13 Lockett, A 6, 13 logic of hybrid organizations see hybrid organizations and Williamson, O.E Lorsch, J 64 Love, J.H 187, 189, 201 McCarthy, J.C 125 McIvor, R 12 Macneil, I.R 90, 94 manufacturing abroad 206–34 see also Veneto footwear and clothing industry Mahnke, V 66, 148, 150 Malerba, F 60, 159, 168 Manne, H.G 23 Marengo, L 129 Mariotti, S 79 Markets and Hierarchies 88–9, 92 Marris, R 12, 25 Marturana, H.R 68 Martynova, M 27 Mayer, C 27, 42 Mazzanti, M 10, 177 Mechanisms of Governance, The 88, 91–2 Meckling, W 50 Melitz, M 215 Ménard, C 3–4, 9, 97, 101 Metcalfe, J.S 12 Meyer, A.D 66 Michie, J 4, 13, 37–8, 42, 43 Milgrom, P 20, 29, 32, 42, 66, 71 Miller, G.J 68, 80, 84 Mintzberg, H 64, 68 Miozzo, M 127, 132 Mitchell, M.L 25 Mol, M.J 159, 173, 177 Montresor, S 10, 148, 153, 176, 177 Moore, G 21 Moore, J 19, 50 Morroni, M 5, 12, 32, 42 Mulherin, H.J 25 Mullainathan, S 25 239 Murphy K.J 21 Mylott, T.R 127 Nardin, G 211 Nellore, R 153 Nelson, R 111, 144 neo-Schumpeterian and evolutionary economics 158 networks 105–9, 115, 118, 184 advantages of 106–7 characteristics of 105–6 and IIPS system 105, 106–8 and limits of specialization 107–8 role of 105 new capabilities, formation of 6–7 Ng, F 206 Nightingale, P 130 Nobeoka, K 189 Nooteboom, B 148 Oliver, A.L 87, 101 organization of firms, knowing communities and networks see knowing networks organization forms 63–86 as chemical formulas 67–81 Boolean Comparative Analysis and organizational formulas 74–6 combination laws 76–8 complementaries and combinatory laws 71–2 contingencies 79–81, 82 doses of an element 69, 71 evaluation functions and multifunctionality 72–4 organizational elements, table of 68–9, 70 types of outcomes 78–9 and conclusions 81, 83 discrete structural alternatives view of 63–7 organization theory 65 organizational architectures 133–5 coordination (capabilities, transaction and scale-scope) 4–5 economics 6, 66 innovation 20 240 Index technologies and outsourcing 128–32 learning: exploitation vs exploration 135–7 specialization 130–1 Orr, J 118 Orsenigo, L 60, 159, 168 O’Sullivan, M 42, 48, 54, 55 Oughton, C 37–8, 43 Oyer, P 21, 36 outsourcing 10–11 see also Veneto footwear and clothing industry business service 10 decisions and variables 10 firm as four-fold unit of analysis 11 impact on long-run productivity growth 132 networks 11 and organizational innovation 128–32 see also organizational innovation potential advantages/costs of 124–8 to domestic contractors 11 to specialist KIBS 129 outsourcing firm 148–80 see also outsourcing firm profile: Reggio Emilia as industrial unit of analysis 156–8 firm size 157, 158 industrial relations 157, 158 market competition and output concentration 157, 158 as innovation unit of analysis 158–162 firm’s organizational innovations and its flexibility 161, 162 firm’s technological innovations 159, 161 innovation radicalness 161, 162 technological uncertainty and technological regimes 159, 160 as organizational unit of analysis 150–4 asset specificity and governance inseparability 150 intangible assets and interface knowledge 151–3 interrelationships among transactions 152, 153 market uncertainty and asset specificity 152, 154 as production unit of analysis 154, 155 firm uncertainty and demand variability 155, 156 labour costs/skill content of firm’s activities 154–6 union density: labour costs and governance inseparability 155, 156 general profile of 174 in local production system: Reggio Emilia (Emilia-Romagna) 162–9 dataset 163–5 model 165–6 variables 166–9 dependent 166–7 independent 167–9 and outsourcing determinants 149–62 outsourcing firm profile: Reggio Emilia 169–74 industrial level 172–3 innovation level 173–4 organizational level 169–71 production level 171–2 outsourcing implications for organizational innovation and productivity 123–47 see also organizational innovation and outsourcing and directions for further research 143–4 results of 140–3 simulation model (and) 132–40 innovation and outsourcing decision 139–40 organizational architectures 133–5 organizational learning: exploitation vs exploration 135–7 production costs 137–9 profits 139 outsourcing networks, technical and social capital in 181–205 Index data and methodology for 189–93 assessing company networking resources, variables for 191–3 discussion and findings for 199–202 and results: correlation analysis 194–9 and strategy/companies’ awareness of technical resources 188–9 theoretical background to 183–89 see also social capital and technical capital Owen, G 229 ownership and control, separation between 20 Pagano, M 22, 24–5, 39 Palay, T.M 97, 98, 101 Panciroli, B 188 Pardo, R 11, 159 Pavitt, K 111–13 Pendleton, A 37 Peneder, M 125 Penrose, E 6, 12, 13, 56 Pérez, C 187, 200 Pérotin, V 37, 38 Petroni, A 185, 188 Pindyck, R.S 167 Pini, P 10, 162, 176 Pisano, G 56 Piscitello, L 56 Pistor, K 30, 42 Pittaway, L 182, 184, 186, 189, 199 Polos, L 63 Porter, M.J 166 Poutsma, E 36, 37 Prahalad, C.K 167 Prencipe, A 127, 132 Preston, L 55 problem-solving activity 129–30 Pugh, D.S 64 Ragin, C.C 74–5, 84 Rajan, R.G 19, 20, 21, 28, 42 , 55 Rama, R 11, 159, 186, 187, 188, 189, 199, 200 Rao, R 4, 12 Ravix, J-L 3, 8, 60 Reggio Emilia 10 see also outsourcing firm and 241 outsourcing firm profile: Reggio Emilia Camera di Commercio (2001) 163 Reinstaller, A 10–11, 13, 131, 144, 165, 230 Renneboog, L 27 Richardson, G.B 12, 89 Ricketts, M 13 Ritter, T 201 Robb, R 230 Roberts, J 32, 66, 71 Robertson, P.L 129, 159, 162 Robinson, A 37, 38 Roe, M.J 30–31 Roper, S 187, 189, 201 Rosenberg, N 12 Rossi, S 22 Ruback, R 26 Rubinfeld, D.L 167 Rush, H 185, 188 Sako, M 188, 189, 200 Sánchez, A.M 187, 200 Saviotti, P 13 Sawyer, S 80 Schaefer, S 21, 36 Schiattarella, R 206, 229 Schleifer, A 20, 22, 25–6, 27, 28, 51 Schmid, F 30, 31 Schmidt, R.H 27, 42 Schumpeterian creative response Secchi, A 12 Sen, A 73 Seravalli, G 162 Sheehan, M 4, 13, 42 Shya, O 156 similarity and difference ‘in kind’ 65 Simon, H.A 64–5, 129–30 Singh, H 159 Smith, A 113, 129, 158 principle of specialization 129 social capital 181–205 see also technical capital concept of 183 and differences within networks 188 and relationship with technical capital 186–7 Soda, G 76 Soderquist, K 153 Soskice, D.W 31, 33, 35 242 Index specialized business service firms 124–5 Spencer, B.J 148 Spiegel, Y 177 stakeholder corporate governance view (and) 19–47 compensation rules 21 conclusions 38–42 employee share ownership 24 incentives and labour relationships 28–38 see also main entry Intel 20–21 LVMH and Gucci 23–4 manager–worker alliances 24–5 takeovers and management labour relationship 22–8 see also takeovers stakeholder(s) losses/shareholder gains 26 property rights 28 vs shareholders 21–2 welfare of 28–9 stakeholder-labour governance 33 Stalker, G.M 80 Stark, D 76 Steinmueller, W.E 127, 132 Stenbacka, R 156 Stevanato, D 229 Stiglitz, J.E 21 Stroemberg, P 50 studies/surveys (on) Italian manufacturers and export (Capitalia, 2005) local production systems, Italy (Pini, 2004) 162–3 outsourcing (McCarthy 2002) 125 outsourcing (Morgan Chambers, 2001) 125 outsourcing in Japan (Outsourcing Institute, 2005) 125 stakeholder protections (OECD) 38 Suárez-Villa, L 186, 187, 189 Summers, L.H 25–6, 27, 28 system economies concept 130 takeovers 22–8 hostile 23–6 literature on 26 negative side of 27 Tattara, G 11, 127–8, 211, 214, 228, 229 Taylor, S 156, 177 Taymaz, E 149, 154, 158, 176, 177 technical capital 181–205 and association with social capital 186–7 concept of 184–5 and differences within networks 188 technological regime (TR) 159 Schumpeter-Mark-I 159, 173 Schumpeter-Mark-II 159 Teece, D.J 12, 56, 159, 162 Tenkasi, R.V 109 Thompson, J.D 64 Tirole, J 26, 29, 116, 148 Tomlinson, M 125 Tortia, E 163 transaction-cost economics (TCE) 173, 174–6 United States of America (USA) (and) 206 corporate governance reform 36 profit sharing and employee share ownership 37 Uvalic, M 37, 38, 42 Van de Ven, A.H 64 Vanhaverbeke, W 181, 188, 189, 200 Varela, F.J 68 Varga A 184, 185, 187 Veneto footwear and clothing industry 127–8, 206–34 delocalization strategy for 227–8 deverticalization of 210–12 and domestic subcontracting 211–12 and estimates: analysis of group of Veneto companies 216–25 and interpreting and empirical results 225–7 relocation of 211–12 relocation abroad of 215–16, 228 outsourcing of 213–16 Van Reenen, J 13 Veneto Provincial Chamber of Commerce 216 Vishny, R 20, 22, 51 Volpe, M 206 Index Volpin, P.F 22, 24–5, 39 von Hartman, L 126–7 Wagner, G P 144, 147 Wenger, E 109 Wernerfelt, B 56 Whittington, R 66 Wilkinson, I 182, 189 Williamson, O.E 64–5, 84, 87–102, 113, 148, 150, 154, 183 see also hybrid organizations and ‘Comparative economic organization’ 87 Willinger, M 118 Windrum, P 10–11, 13, 125, 165, 230 Winter, S.G 144, 148 World Trade Organization 209 Wright, M 48 Wulf, J 21 Yates, J 131 Young, A.A 130 Young, L 182, 189 Zack, P 184 Zingales, L 19, 20, 28, 42, 55 Zuscovitch, E 105, 118, 119 243 ... Bjuggren and Dennis C Mueller The Growth of Firms A Survey of Theories and Empirical Evidence Alex Coad Corporate Governance, Organization and the Firm Co- operation and Outsourcing in the Global Economy. .. include: Corporate Governance, Organization and the Firm Co- operation and Outsourcing in the Global Economy Edited by Mario Morroni The Modern Firm, Corporate Governance and Investment Edited... forms, including social enterprise and employee ownership intellectual property and the learning economy, including knowledge transfer and information exchange Titles in the series include: Corporate