| Abstract: | This paper investigates the impact of outsourcing on the labor productivity of firms in a specific local production system. A number of hypotheses about the location‐specific effects of outsourcing are put forward and tested on a sample of firms in the province of Reggio Emilia (within the Emilia‐Romagna region, in North‐East Italy). The relationship between outsourcing and productivity turns out positive only if considering the externalization of high value‐added activities. On the contrary, it is negative in the case of low value‐added activities. This occurs to a greater extent for firms in mature industrial districts, whose socio‐economic conditions however do not arrive to magnify the productivity premium of externalizing high value‐added ones. The technological innovativeness of the firms instead helps with that, pointing to a developmental use of outsourcing in the area. |
