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What Determines In-house Service Activities within Manufacturing Firms: Firm-level Evidence from Korea

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  • Siwook Lee

    (KDI School of Public Policy and Management)

Abstract

This study empirically investigates the key determinants of in-house service activities within manufacturing firms based on an establishment-level panel dataset from 2006 to 2019. The extent of in-house service activities is measured as the proportion of workers performing knowledge-intensive core service functions, such as R&D, design, IT, administration, and management. After controlling for unobserved heterogeneity and simultaneity by adopting the system generalized method of moments, our regression results reveal that companies with higher export intensities, wider networks of overseas subsidiaries, or those located in metropolitan areas engage in more in-house service activities than their counterpart, and that no statistically significant link exists between external outsourcing and in-house service activities. Overall, our results suggest that export activities and overseas FDI networks are key determinants of the extent of in-house service provisions within Korean manufacturing firms.

Suggested Citation

  • Siwook Lee, 2023. "What Determines In-house Service Activities within Manufacturing Firms: Firm-level Evidence from Korea," Korean Economic Review, Korean Economic Association, vol. 39, pages 445-468.
    • Handle: RePEc:kea:keappr:ker-20230701-39-2-05
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Servicification; Outsourcing; Vertical Integration; Global Value Chains;
    All these keywords.

    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L80 - Industrial Organization - - Industry Studies: Services - - - General
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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