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Efficiency implications of geographically and functionally disaggregated activities

November 2015

AIB Conference Bocconi University

Julien Gooris, econometrician at Microeconomix, presented a research conducted with Carlos Rodriguez (INCAE, Managua) at the AIB mini-conference at Bocconi University. In the context of increasingly global value chains, this research presentation addresses the efficiency implications of geographical and functional dispersions in international service production.

How does breaking-up value chains affect efficiency? The fine-slicing of firms’ activities and their global dispersion enable firms to further leverage location advantages and their assets, to access to specialization gains and to refocus on their core competencies. While much of the interest concentrated on the antecedents, distinctive characteristics and consequences of value chain reconfiguration, the efficiency determinants of globally dispersed production units have been overlooked. This empirical research explores the effect of the global configuration, in terms of geographic and functional dispersion, on the efficiency of the service production. In additional we highlight the substantial impacts of the production mode (internal vs outsourced) and the relatedness of the different functions (at the country-level).

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