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Technological change and the vertical organization of industries
journal contribution
posted on 2023-06-08, 22:53 authored by Tommaso CiarliTommaso Ciarli, Riccardo Leoncini, Sandro Montresor, Marco ValenteThe vertical scope of a firm, that is, which components or segments of the production processes are kept in–house and which are outsourced, is variously considered as depending on cost and/or technological conditions. Most of the literature focuses on the incentives for an individual firm facing exogenous competition and technological opportunities. In this paper we consider the problem from the perspective of the whole industry: in what respect does firm organizational behavior depend on the industry technological evolution and aggregate structure, and how does innovation and organizational behavior affect the industry structure. We build an evolutionary simulation model of an industry where competitors decide the number of internally produced components. We relate the industry average value of market outsourcing to the technological conditions prevalent in the industry. The results from the model shed light on a number of (apparently) contradictory suggestions in the economic and management literature.
History
Publication status
- Published
Journal
Journal of Evolutionary EconomicsISSN
0936-9937Publisher
Springer VerlagExternal DOI
Issue
3-4Volume
18Page range
367-387Department affiliated with
- SPRU - Science Policy Research Unit Publications
Full text available
- No
Peer reviewed?
- Yes
Legacy Posted Date
2015-10-22Usage metrics
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