Technological change and the vertical organization of industries

Ciarli, Tommaso, Leoncini, Riccardo, Montresor, Sandro and Valente, Marco (2009) Technological change and the vertical organization of industries. In: Cantner, Uwe, Gaffard, Jean-Luc and Nesta, Lionel (eds.) Schumpeterian Perspectives on Innovation, Competition and Growth. Springer-Verlag, Berlin, pp. 115-136. ISBN 9783540937760

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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 opportunites. 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.

Item Type: Book Section
Keywords: Firm organization; Industrial structure; Technological dynamics
Schools and Departments: School of Business, Management and Economics > SPRU - Science Policy Research Unit
Subjects: H Social Sciences > HB Economic theory. Demography
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Depositing User: Tommaso Ciarli
Date Deposited: 22 Oct 2015 12:28
Last Modified: 18 Feb 2016 09:48

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