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Gains from Fragmentation at the Firm Level: Evidence from Japanese Multinationals in East Asia

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Author Info

  • Kazunobu HAYAKAWA

    ()
    (Inter-disciplinary Studies Center, Institute of Developing Economies, Japan)

  • Fukunari KIMURA

    (Economic Research Institute for ASEAN and East Asia Faculty of Economics, Keio University, Japan)

  • Toshiyuki MATSUURA

    (The Institute of Economic Research, Hitotsubashi University, Japan)

Abstract

The unprecedented development of production networks in East Asia has been investigated, both theoretically and empirically, employing the conceptual framework of fragmentation theory and its extensions. However, the benefits of production fragmentation at the firm level, particularly benefits deriving from different location advantages, have never been directly measured empirically. This paper presents the very first attempt, to the authors' knowledge, to empirically capture the benefits of fragmentation. Specifically, using Japanese firm-level data, we find that the larger the gap in the capital-labor ratios between fragmenting firms' home and overseas activities, the more greatly their cost efficiency improves.

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Bibliographic Info

Paper provided by Economic Research Institute for ASEAN and East Asia (ERIA) in its series Working Papers with number d010.

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Date of creation: 2009
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Handle: RePEc:era:wpaper:d010

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Related research

Keywords: Firm heterogeneity; multinational enterprises; fragmentation; factor intensity; micro data.;

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Cited by:
  1. Fukunari Kimura & Ayako Obashi, 2011. "Production Networks in East Asia : What We Know So Far," Trade Working Papers 23216, East Asian Bureau of Economic Research.
  2. Fukunari Kimura, 2009. "The Nature and Characteristics of Production Networks in East Asia: Evidences from Micro/Panel Data Analyses," Global COE Hi-Stat Discussion Paper Series gd09-093, Institute of Economic Research, Hitotsubashi University.

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