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Production Externalities in the Wood Furniture Industry in Central Java

Author

Listed:
  • Roos K. Andadari

    (Satya Wacana Christian University)

  • Henri L.F. de Groot

    (VU University Amsterdam)

  • Piet Rietveld

    (VU University Amsterdam)

Abstract

This paper exploits micro firm level data to examine the impact of spatial clustering and links to foreign buyer networks on firm performance in the wood furniture industry in Central Java, Indonesia. The analysis is based on an annual manufacturing survey. We identify the impact of specialization of the cluster, diversification, and links to foreign buyer networks. For this purpose, a production function framework is developed. The results lend support to the view that clustering of large and medium scale specialized firms improves firm performance, while clustering of small scale specialized firms and clustering of diverse firms are not conducive to firm performance. We also find a clear positive association between involvement in exporting activities and firm performance.

Suggested Citation

  • Roos K. Andadari & Henri L.F. de Groot & Piet Rietveld, 2012. "Production Externalities in the Wood Furniture Industry in Central Java," Tinbergen Institute Discussion Papers 12-072/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20120072
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    More about this item

    Keywords

    Productivity; Externalities; Wood Furniture Industry; Indonesia;
    All these keywords.

    JEL classification:

    • D20 - Microeconomics - - Production and Organizations - - - General
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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