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Cross‐Border Vertical Integration and Technology in Factory Asia: Evidence from Korea
Author(s) -
Chun Hyunbae,
Hur Jung,
Kim Doyoung,
Son Nyeong Seon
Publication year - 2020
Publication title -
the developing economies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.305
H-Index - 30
eISSN - 1746-1049
pISSN - 0012-1533
DOI - 10.1111/deve.12228
Subject(s) - multinational corporation , factory (object oriented programming) , business , vertical integration , supply chain , east asia , international trade , southeast asia , manufacturing , economic geography , industrial organization , economics , china , geography , marketing , ancient history , archaeology , finance , computer science , history , programming language
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.