Vertical Integration and Exogenous Market Shocks in Korea’s Automobile Industry

초록

A stochastic production frontier of Korea’s automobile industry, vertically integrated with capital-share (VI) and non-VI (NVI) structure, identify: in the aftermath of exogenous market shocks, NVI firms with extensive business durations boosted industry productivity growth; NVI entrants enhanced industry productivity growth; exiting NVI and VI firms contributed to severe productivity retrogression in 2015, prior to actual exit; VI firms with extensive business durations boosted VI structure productivity growth, despite agency costs; VI entrants dampened VI structure productivity growth while NVI entrants boosted NVI structure productivity growth; and self-selecting firms shifting from VI to NVI structure increased NVI structure productivity growth.

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