Within firm supply chains: Evidence from India

• 成果类型: Article
• 署名作者: Garg, Shresth; Ghosh, Pulak; Tan, Brandon Joel
• 署名单位: Harvard University; Indian Institute of Management (IIM System); Indian Institute of Management Bangalore
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2023.103793
• 发表日期: 2023
• 关键词: Vertical Integration; Supply chains; TRADE; CONTRACTING

摘要

There are competing theories on whether vertical ownership is motivated by the transfer of physical inputs or the transfer of intangibles. Using administrative data on the universe of goods shipments in Karnataka, India, we show that the supply of goods along the production chain is an important rationale for vertical integration. First, we develop and estimate a gravity model of input sourcing, and find that: (1) establishments have a strong preference for sourcing their physical inputs from suppliers within the same firm relative to other frictions such as distance and state borders, and (2) the share of within-firm trade would be near 2% absent this preference for internal suppliers. Next, we compare this to the data and find that 38% of products are sourced by establishments exclusively from within the firm when a vertically integrated supplier exists; an order of magnitude higher than our 2% benchmark. Finally, we validate that within-firm sourcing is associated with determinants of physical supply chain transaction costs such as product specificity and R & D investment.& COPY; 2023 Elsevier B.V. All rights reserved.