In this paper, we study the firm’s boundaries in times of COVID-19. Ownership and location decisions govern sourcing and shape firms’ boundaries. Adopting incomplete contracts theory/international economics perspective, we investigate the determinants of ownership and location decisions and explore COVID-19–induced changes in firms’ boundaries. Drawing on survey data from a sample of Italian firms, our estimates suggest that input specificity drives the ownership decision, whereas the location decision depends on productivity. Few firms re-consider sourcing because of the pandemic, suggesting a great deal of inertia in firm’s boundaries.
Bernasconi, M., Galetti, S., Gattai, V., Natale, P. (2022). Contract Incompleteness and the Boundaries of the Firm in Times of COVID-19. JOURNAL OF INDUSTRY, COMPETITION & TRADE, 22(3-4), 371-409 [10.1007/s10842-022-00387-7].
Contract Incompleteness and the Boundaries of the Firm in Times of COVID-19
Gattai V.Penultimo
;Natale P.
Ultimo
2022
Abstract
In this paper, we study the firm’s boundaries in times of COVID-19. Ownership and location decisions govern sourcing and shape firms’ boundaries. Adopting incomplete contracts theory/international economics perspective, we investigate the determinants of ownership and location decisions and explore COVID-19–induced changes in firms’ boundaries. Drawing on survey data from a sample of Italian firms, our estimates suggest that input specificity drives the ownership decision, whereas the location decision depends on productivity. Few firms re-consider sourcing because of the pandemic, suggesting a great deal of inertia in firm’s boundaries.
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