Research in progress

Beyond the Giants: The Hidden Role of Micro and Small Enterprises in GVC Reconfiguration Dynamics

with Luigi Tredicine and Fabio Landini- Revise and resubmit, Journal of International Business Policy

Abstract: This paper investigates the determinants and consequences of reshoring decisions among Italian micro and small enterprises (MSEs) during the 2008-2015 period, focusing on the footwear and clothing industries. Using unique firm-level data from the Italian Ministry of Economy and Finance Annual Survey, we compare MSEs that have reshored production with those that continue operating through offshore outsourcing. Our findings reveal that reshoring is more likely to occur among worse performing MSEs and does not contribute to improve economic performances in the post-reshoring period. The results also show that the post-reshoring performance is heterogeneous across types of domestic region, and the negative impact on performance seems to be positively moderated by the availability of a larger pool of subcontractors in the domestic region where production is reshored. Our results raise concerns regarding the effectiveness of direct reshoring incentives, emphasizing the need for policies aimed at strengthening domestic subcontracting networks to favour re-embeddedness of repatriating MSEs.

Explaining the mutifaceted patterns of migrant entrepreneurship in the global economy: a resource-based approach

with Alessandro Arrighetti - Revise and resubmit - International Journal of Entrepreneurial Behaviour and Research

Abstract: This article aims to propose a novel theoretical framework to interpret the recent patterns of migrant entrepreneurship in the global economy. Our theoretical framework is based on the resource-based view and highlights the role of the migrant enterprise as a collective entity endowed with peculiar tangible and intangible resources. The specific endowment of each migrant firm determines its competitive advantages and disadvantages, as well as its ability to acquire and process knowledge over time and internationalize. Such an approach allows to categorize the migrant enterprise as an autonomous entity, providing a reliable explanation of the heterogeneous performances displayed by these firms. Indeed, even when migrant firms operate in the same host environment and are managed by entrepreneurs of the same ethnic background, their performances tend to be significantly different. Using a resource-based approach, the peculiar features of the migrant enterprise can be disentangled and explained more effectively.
Working paper version: Link

When your client moves abroad: how does backward GVC participation affect local subcontractors’ survival and upgrading?

with Nicoletta Giudice - Under Review

Abstract: The aim of this contribution is to assess how domestic subcontractors operating in low-tech manufacturing industries are affected by global sourcing activities performed by small client firms located in the same territorial context. The empirical analysis focuses on the 2008-2015 period and exploits novel firm-level data extracted from the Italian Ministry of Economy and Finance Annual Survey (IMEFAS), using a sample of Micro and Small Enterprises (MSEs) operating in the clothing and footwear industry. The results show that offshore outsourcing decisions by MSEs decrease failure rates among subcontractors located in the same domestic region. Furthermore, production relocation strategies do not generate significant upgrading incentives among neighboring local subcontractors. Our findings suggest that backward GVC participation is not necessarily associated with displacement effects, and that local value chain relationships among MSEs are stickier compared to those established by larger firms.

From Intra-region to Inter-region: A New Method to Operationalize Resilience

with Ibrahim Shaheen, Steven Brakman and Harry Garretsen

Abstract: Resilience is proven to be relevant for regional development due to the far-reaching implications of crises. Heretofore, scholars have done an intensive work on the conceptual clarity and the determinants of regional resilience, whereas less attention has been paid to the operationalization of this concept. When measuring regional resilience, the conventional practice is to compare pre- and post-shock performances of the target region. We argue that such an approach could be misleading when the shock moves the economic system far away from its previous development path. In this paper, we rethink the way regional resilience is measured. Our method to operationalize resilience is conceptually different from previous work in that we use an inter-regional rather than an intra-regional perspective. Instead of comparing the region’s present to its past, we focus on the post-shock period and compare the target region’s performance to the average performance of a group of comparable regions (peers). We expect such an approach to provide deeper insights on the ability of a territory to withstand and recover after a sudden economic shock. We rely on cluster analysis to identify groups of homogeneous regions. The reliability of the proposed method is tested using a sample of European regions in the context of the great recession of 2008/09. The main finding of the empirical exercise is that resilience outcomes are considerably affected by the empirical method used.

Regional Interconnectedness and resilience

with Ibrahim Shaheen, Steven Brakman and Harry Garretsen

Abstract: The integration of today’s world is greater than ever, which carries huge potential for regional economics as well as huge risks of the adverse effect of sudden shocks. There exists a well-established empirical evidence on the relevance of region-specific characteristics for regional resilience to recessionary shocks. However, a very scant treatment of the role of regional interconnectedness can be found in the literature. In this paper, we investigate the relevance of regional interconnectedness to the heterogeneous response of regional economies in the context of the great recession of 2008/09. In order to capture regional interconnectedness, we rely on proximity, market access, labor movements (migration), and goods movements (regional trade). We conduct a panel data analysis for a sample of NUTS2 European regions to quantify the impact of those factors on regional resilience. We also adopt a new measure of regional resilience that differs significantly from previous work. Our main findings suggest that the more interconnected a region is in terms of a more proximity to urban agglomeration centers, a better market access, a higher share of immigrants and more trade flows, the higher the resilience that region exhibits against recessionary shocks. Our contribution in this paper allows for a more complete picture of resilience determinants.

Immigrant entrepreneurship in Europe: a comparative empirical approach

with Riccardo Rinaldi, Andrea Lasagni and Alessandro Arrighetti - Under review

Abstract: The aim of this paper is to use a multi-country approach to assess the role played by individual characteristics and local labor market conditions in influencing migrants’ self-employment decisions. The empirical investigation exploits data from the EU Labor Force Survey for the 2005-2016 period and focuses on two countries (Italy and the UK) characterized by significantly different labor market dynamics. Our findings suggest that the impact of individual characteristics is similar across countries, whereas the role of the local economic environment changes significantly, resulting in different migrant entrepreneurship patterns. These findings appear to be consistent with the most recent strand of literature, suggesting that while individual characteristics of self-employed migrants are similar across countries, national and regional differences play a key role in determining migrants’ entrepreneurial propensity.
Working paper available here:
https://www.econstor.eu/bitstream/10419/270873/1/immigrantentrepreneurship_econstor.pdf

Unexpected windows of opportunity and forced upgrading

with Gianluca Capone and Cristina Re

Abstract: This paper investigates the impact of foreign multinational enterprises (FMNEs) on the upgrading processes of small subcontractors in Italy’s clothing and footwear sectors from 2010 to 2014. By leveraging detailed datasets on firm characteristics, geographical distribution, and FMNE dynamics, we explore how FMNE births and exits influence local suppliers’ ability to enhance their production capabilities across four dimensions: high value added, number of clients, internal stages, percentage of internal components. Contrary to the prevailing literature, which emphasizes the positive spillovers of FMNE entry, our analysis reveals that FMNE births generally have neutral or negative effects on upgrading. In contrast, FMNE exits create significant “windows of opportunity” for subcontractors, fostering their capacity to upgrade. This study highlights the non-linear role of FMNEs in shaping local upgrading processes, moving beyond the traditional perspective of FMNEs as uniformly beneficial. By focusing on FMNE exits, we draw attention to the proactive role of subcontractors, demonstrating their ability to leverage disruptions to innovate and expand their operations. These findings provide a nuanced understanding of the dynamics within global value chains, where subcontractors are not passive actors but can actively shape their trajectories in response to external shocks.

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