Corporate Governance, Organization and the Firm

Corporate Governance, Organization and the Firm

Co-operation and Outsourcing in the Global Economy

New Perspectives on the Modern Corporation series

Edited by Mario Morroni

In recent years, applied studies have shown widespread, profound and increasing heterogeneity across firms in terms of their strategy, organization arrangement and performance. This book investigates the diversity of business firms, offering a picture of the different organizational settings they adopt in their endeavour to cope with increasing competitive pressure.

Chapter 10: Manufacturing Abroad While Making Profits at Home: The Veneto Footwear clothing industry

Carlo Gianelle and Giuseppe Tattara

Subjects: business and management, corporate governance, economics and finance, corporate governance, industrial organisation


10. Manufacturing abroad while making profits at home: the Veneto footwear and clothing industry Carlo Gianelle and Giuseppe Tattara INTRODUCTION 10.1 Globalization has brought about a sharp increase in the real and financial integration of the worldwide economy. In this closely knit context the outsourcing of some of the productive and trade activities abroad becomes the focal point of the policies followed by firms in order to face competition on international markets. The shift of manufacturers towards countries with lower labour costs was underlined by some experts at the beginning of the 1970s, and especially involved countries with relatively high labour costs such as the USA, Germany, Sweden, Denmark and UK (Ádám 1971; Finger 1976, 1977). Over the past decades the capacity of manufacturing firms to slice the production cycle without incurring high diseconomies has given large impetus to production globalization and has driven firms in countries, like Italy, with salaries lower than those in the USA and Northern Europe, to look for lower production costs abroad. Additionally the participation of Eastern European countries, Russia and China in the international consumption market has provided a further incentive to transfer the manufacturing processes abroad by locating outposts in areas close to markets with high sales potential. To determine the degree of internationalization of a firm is not an easy task: the usual measure is the value of the direct overseas investments made to set up a new company abroad, or to purchase one already in existence. Italian overseas investments...

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