Abstract

This study presents an empirical analysis of the production outsourcing effect on firm productivity and profitability in the Italian manufacturing industry. This study uses firm-level panel data that were developed by the Italian National Statistical Institute. Using different estimation strategies, we develop panel data models and correct for possible endogeneity bias of the outsourcing with respect to the target variables. We find a non-significant effect of outsourcing on profitability and a significant negative effect of outsourcing on productivity.

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