Korean Automobile Assemblers' Choice of Out-Sourcing Channel: Transaction Cost Approach

Deuk Kyu Bok
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Deuk Kyu Bok: Samsung Economic Research Institute

Korean Economic Review, 1997, vol. 13, issue 1, 167-176

Abstract: Using the framework of transaction cost economics, this paper delves into Korean automobile assemblers’ choice of out-sourcing channel. There are two types of out-sourcing channels in the Korean automobile industry, namely KEY OL and HADOGUB respectively. We set the hypothesis that KEY OL is more effective than HADOGUB in reducing transaction costs arising from parts supply contracts. The result of empirical test conï¬ rms our hypothesis. The result may stem from the fact that KEY OL is an aï¬ iliated firm of assembler and the management boards of KEY OL have more intimate personal relationship with the boards of assembler than those of HADOGUB.

Date: 1997
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