Internationalisation and the agglomeration effect in the global value chain: the case of Italian Automotive Suppliers

The aim of this paper is to study the internationalisation process in a representative sample of 786 firms operating in the Italian automotive industry, a paradigmatic example of a producer driven global value chain. Building on the global value chain literature, the contribution this paper makes is by taking into account the agglomeration and the chain governance dimension (vertical linkages with a leader automotive firm) together in order to investigate what is their respective role in enhancing internationalisation of supplier firms in the automotive industry. After performing a probit regression analysis, we find that being located in a high-density industrial district and producing more research-intensive automotive-specific goods, increase the probability of internationalisation of the supplier firm. High dependency from domestic sales to FIAT, the dominant firm in the Italian market, and being a subcontractor of generic goods has the opposite effect.