Abstract
In this paper the hypotheses on motives for vertical integration as proposed by Stigler are empirically tested using a panel dataset from Malaysian manufacturing under both fixed-effects and random-effects specifications. Because the degree of multinational participation is expected to influence the results of the regression estimates, empirical tests are conducted with and without controlling for the effect of foreign firms' participation. Depending on model specifications, evidence is found in favor of Stigler's hypotheses where vertical integration is positively related to demand growth and industry concentration. This result is generally consistent with those found in other vertical integration studies. Significantly, the coefficient estimates of the growth variable are not significant and biased downwards if there is no control on the effect of foreign multinationals in the estimation process.
| Original language | English |
|---|---|
| Pages (from-to) | 257-274 |
| Number of pages | 18 |
| Journal | Asian Economic Journal |
| Volume | 20 |
| Issue number | 3 |
| DOIs | |
| Publication status | Published - Sep 2006 |
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Keywords
- Foreign multinationals
- Transaction costs
- Vertical integration
ASJC Scopus subject areas
- Geography, Planning and Development
- Development
Cite this
Vertical integration, foreign multinationals and Stigler's hypotheses : An empirical test using Malaysian data. / Md Nor, Nor Ghani; Abdullah, Ahmad Zainuddin; Nor, Khalil.
In: Asian Economic Journal, Vol. 20, No. 3, 09.2006, p. 257-274.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Vertical integration, foreign multinationals and Stigler's hypotheses
T2 - An empirical test using Malaysian data
AU - Md Nor, Nor Ghani
AU - Abdullah, Ahmad Zainuddin
AU - Nor, Khalil
PY - 2006/9
Y1 - 2006/9
N2 - In this paper the hypotheses on motives for vertical integration as proposed by Stigler are empirically tested using a panel dataset from Malaysian manufacturing under both fixed-effects and random-effects specifications. Because the degree of multinational participation is expected to influence the results of the regression estimates, empirical tests are conducted with and without controlling for the effect of foreign firms' participation. Depending on model specifications, evidence is found in favor of Stigler's hypotheses where vertical integration is positively related to demand growth and industry concentration. This result is generally consistent with those found in other vertical integration studies. Significantly, the coefficient estimates of the growth variable are not significant and biased downwards if there is no control on the effect of foreign multinationals in the estimation process.
AB - In this paper the hypotheses on motives for vertical integration as proposed by Stigler are empirically tested using a panel dataset from Malaysian manufacturing under both fixed-effects and random-effects specifications. Because the degree of multinational participation is expected to influence the results of the regression estimates, empirical tests are conducted with and without controlling for the effect of foreign firms' participation. Depending on model specifications, evidence is found in favor of Stigler's hypotheses where vertical integration is positively related to demand growth and industry concentration. This result is generally consistent with those found in other vertical integration studies. Significantly, the coefficient estimates of the growth variable are not significant and biased downwards if there is no control on the effect of foreign multinationals in the estimation process.
KW - Foreign multinationals
KW - Transaction costs
KW - Vertical integration
UR - http://www.scopus.com/inward/record.url?scp=33748324663&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=33748324663&partnerID=8YFLogxK
U2 - 10.1111/j.1467-8381.2006.00235.x
DO - 10.1111/j.1467-8381.2006.00235.x
M3 - Article
AN - SCOPUS:33748324663
VL - 20
SP - 257
EP - 274
JO - Asian Economic Journal
JF - Asian Economic Journal
SN - 1351-3958
IS - 3
ER -