Ownership Type, Firms’ Strategies, Business Duration, and Productivity: Evidence from Korea’s Iron and Steel industry
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This paper investigates the extent to which the strategies of firms affect productivity growth according to changes in ownership type and business duration by applying a fixed effect stochastic frontier production function (FE SFPF) model to a firm-level panel data set for the period 2006-2011, using Korea’s iron and steel industry as the research context. Empirical results show that while affiliated firms (AF) and independent firms (IF) achieved similar technical progress (TP), AF’s far worse changes in technical efficiency caused its total factor productivity (TFP) growth to fall far below the TFP growth of IFs. The number of strategies and the number of technology strategies specifically had positive effects on TFP growth across all firms in the Korean iron and steel industry. Firms that were not operational throughout the sample period showed higher TP and larger positive changes in firms’ strategies but worse performances in technical efficiency, which caused its TFP growth to plummet to 0%. Firms changing from IF to AF, and those that alternated between AF and IF more than two times, achieved an astonishingly high TP of 15.2%. Regarding TP, and changes in technical efficiency, firms maintaining IF outperformed firms maintaining AF, which verifies that IF had higher productivity–enhancing competitiveness than AF. Therefore, specific strategies on technology need to be implemented to promote technical progress and, ultimately, productivity growth, to enhance the global competitiveness of firms in the Korean iron and steel industry.
Abstract
This paper investigates the extent to which the strategies of firms affect productivity growth according to changes in ownership type and business duration by applying a fixed effect stochastic frontier production function (FE SFPF) model to a firm-level panel data set for the period 2006-2011, using Korea’s iron and steel industry as the research context. Empirical results show that while affiliated firms (AF) and independent firms (IF) achieved similar technical progress (TP), AF’s far worse changes in technical efficiency caused its total factor productivity (TFP) growth to fall far below the TFP growth of IFs. The number of strategies and the number of technology strategies specifically had positive effects on TFP growth across all firms in the Korean iron and steel industry. Firms that were not operational throughout the sample period showed higher TP and larger positive changes in firms’ strategies but worse performances in technical efficiency, which caused its TFP growth to plummet to 0%. Firms changing from IF to AF, and those that alternated between AF and IF more than two times, achieved an astonishingly high TP of 15.2%. Regarding TP, and changes in technical efficiency, firms maintaining IF outperformed firms maintaining AF, which verifies that IF had higher productivity–enhancing competitiveness than AF. Therefore, specific strategies on technology need to be implemented to promote technical progress and, ultimately, productivity growth, to enhance the global competitiveness of firms in the Korean iron and steel industry.
참고문헌 (14)
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