Industrial proximity and vertical integration of multinational firms
| Autor: | Haeyeon Yoon, Jung Hur |
|---|---|
| Rok vydání: | 2018 |
| Předmět: |
Supply chain
05 social sciences Market access Foreign direct investment Vertical integration Final good Multinational corporation Microdata (HTML) 0502 economics and business Industrial relations Business 050207 economics Business and International Management General Economics Econometrics and Finance Industrial organization 050205 econometrics Global value chain |
| Zdroj: | Journal of Korea Trade. 22:50-67 |
| ISSN: | 1229-828X |
| DOI: | 10.1108/jkt-11-2017-0100 |
| Popis: | Purpose With the rise of foreign direct investment and global value chain, firms organize their plant allocation across countries to take advantage of production cost reduction opportunities and market access. The purpose of this paper is to investigate the production-supply strategies of Korean firms over foreign and domestic affiliates, using industrial proximity between Korean parent firms and their affiliates. Design/methodology/approach In this paper first, using the Survey of Business Activities provided by Statistics Korea, the authors build a matching data set between a parent firm and each affiliate both in domestic and foreign countries. Second, the authors define their vertical relationship based on the input requirement coefficients of the Input-Output table (IO table). Furthermore, using the same IO table, the authors define the proximity for the pairs of the parent firm and the affiliates in domestic and foreign markets. Then, the authors test the relationship between the parent firm’s choice for foreign affiliate and their proximity index. Findings The main result shows that the stronger the industrial proximity between a final good producing firm and its input supplying affiliate is, the more likely the cross-border vertical integration is to be observed than the domestic vertical integration. Also, the authors find that the firms whose production structure accords the main result outperform and conduct more self-R&D and less R&D on trust than the other firms. Originality/value The finding is novel and original in a sense that the authors showed for the first time at firm-level microdata evidence that there is an optimal pattern of organizing supply chains within a multinational firm. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
|