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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 Valente
The 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 Economics

ISSN

0936-9937

Publisher

Springer Verlag

Issue

3-4

Volume

18

Page range

367-387

Department affiliated with

  • SPRU - Science Policy Research Unit Publications

Full text available

  • No

Peer reviewed?

  • Yes

Legacy Posted Date

2015-10-22

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