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http://dx.doi.org/10.5762/KAIS.2014.15.5.3146

The Analysis of Subcontracting Trade in the IT Industry located in Gyeonggi-Do  

Yoon, Choong-Han (Department of Economics, Hanyang University)
Son, Jong Chil (Economic Research Institute, the Bank of Korea)
Publication Information
Journal of the Korea Academia-Industrial cooperation Society / v.15, no.5, 2014 , pp. 3146-3152 More about this Journal
Abstract
This paper investigates the determinants for the controlling power and the concentration of the subcontracting trade between the downstream producer and the upstream supplier using a survey data for the IT industry in Gyeonggi-Do. The estimation results of the ordered logit and least square analyses are as follows. First, a firm. s controlling power across the downstream producer and the upstream supplier in the subcontracting trade would grow bigger when the company is bigger, more manufacture-oriented, and has higher ratio of export in sales. Second, the analysis for the upstream suppliers indicates that the higher dependent ratio of the subcontracting trade in the sales, the lower the concentration ratio of the R&D in the sales. Lastly, the analysis of the downstream producers indicates that the higher the dependent ratio of the subcontracting trade in the sales, the higher the concentration ratio of the R&D in the sales, which is distinctively contrast with the analysis result of the upstream suppliers. The overall estimation results are, hence, unsupporting to the transaction cost theory which predicts the increase of R&D investments in both downstream producer and upstream supplier.
Keywords
Downstream producer; Subcontracting trade; Upstream supplier;
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