Using results collected for the first time through interviews with Italian manufacturing firms, this work shows that around a quarter of aggregate manufacturing sales are not sold by the actual producer. This means that the comparative advantage of some manufacturing firms lies in activities other than crafting, with important consequences for the interpretation of firms’ productivity measures. A 3% productivity premium is identified for this type of firm, which increases to 10% when the firms mainly operate packaging on sourced goods and to 20% when their brand is a clear asset. Furthermore, CAT firms specializing in downstream activities earn higher profit margins on sourced than on in-house production. Productivity measures that disregard this phenomenon bundle a firm’s ability in combining factors within a physical production process with other sources of profitability, such as proximity to consumers, access to foreign markets through well-established distributional channels, and marketing skills.
