earticle

영어

The objective of this study is to analyze the determinants of sourcing strategies of foreign invested enterprises (FIEs, hereafter) in Korea. We first find that the FIEs in Korea either engage mainly in insourcing (from their parent firms) or domestic outsourcing (from the host country). The sourcing pattern of FIEs reflects the motivation of FDI and influence knowledge spillover at the same time. Therefore, it is important to analyze the souring patterns as well as the determinants of sourcing patterns. In order to analyze the determinants of sourcing strategies of FIEs, we obtain the data from ‘2012-2013 Foreign Invested Enterprises Business Research.’ Our data sources are based on the two-year period from 2011 to 2012. To control heterogeneity, this paper restricts to manufacturing firm level data and utilizes 558 firm level samples. This paper employs a bivariate choice logistic model to investigate the determinants of sourcing strategies via firm-level. To do so, we label each firm via its trade mode as either incourcing or outsourcing type based on the examination of firm level data. To label each firm's type, we specifically consider the purchase proportion of each FIE in Korea. Namely, if the proportion of local purchase by FIE is more than (or equal to) 70% of the total purchase, then we label this FIE as domestic outsourcing type. Similarly, if the proportion of purchase from headquarter is more than (or equal to) 70% of the total purchase, then we label this FIE as insourcing type. Our logistic regression analysis considers parent firm data as well as FIEs' data. We find that the labor productivity of FIEs and R&D ratio of parent firm significantly increase the likelihood of being an insourcing type. On the other hand, the labor productivity of FIEs and R&D ratio of parent firm significantly increase the likelihood of being an outsourcing type. The higher the parent firm's capital-labor ratio, the more likely this FIE is an insourcing type. This result is consistent with the existing literature (Antràs, 2003; Antràs and Helpman, 2004; Corcos et al., 2013). Finally, the accumulated stock of FDI lowers its probability of becoming an insourcing type even though does not affect its probability of becoming an outsourcing type. The final section concludes with some thought about the future extensions.