Cross‐Border Vertical Integration and Technology in Factory Asia: Evidence from Korea. (8th May 2020)

• Record Type: Journal Article
• Authors: Chun, Hyunbae; Hur, Jung; Kim, Doyoung; Son, Nyeong Seon
• Is Part Of: Developing economies. Volume 58:Number 2(2020:Jun.)
• Page Start: 99
• Page End: 133
• Publication Date: 2020-05-08
• Subjects: Cross‐border vertical integration -- Firm boundaries -- Property rights theory -- Factory Asia; Developing countries -- Economic conditions -- Periodicals; 338.90091724
• DOI: 10.1111/deve.12228
• Languages: English
• ISSNs: 0012-1533

Abstract

Abstract : Factory Asia, supply chains in Asian countries, is a center of global manufacturing. Over the last decade, Asian multinational enterprises have become a significant part of Factory Asia. In this paper, we examine the boundaries of Korean firms in Asia. More specifically, we test the predictions of property rights theory for cross‐border vertical integration, using firm‐level data from Korean multinational enterprises. In line with the theory's predictions, we find that cross‐border backward vertical integration is positively related to the R&D intensity of domestic producing industries and negatively related to those of foreign supplying industries, but only when transactions between the producing and supplying industries are large enough. These results can help us to understand how Asian multinational enterprises develop their supply chains in Asia.