Production Externalities in the Wood Furniture Industry in Central Java

Tinbergen Institute Discussion Paper No. 12-072/3

26 Pages Posted: 19 Jul 2012

See all articles by Roos Andadari

Roos Andadari

Satya Wacana Christian University

Henri L. F. de Groot

VU University Amsterdam - Department of Spatial Economics; Tinbergen Institute

Piet Rietveld(Deceased)

affiliation not provided to SSRN; Tinbergen Institute

Date Written: July 18, 2012

Abstract

This paper exploits micro firm level data to examine the impact of spatial clustering and links to foreign buyer networks on firm performance in the wood furniture industry in Central Java, Indonesia. The analysis is based on an annual manufacturing survey. We identify the impact of specialization of the cluster, diversification, and links to foreign buyer networks. For this purpose, a production function framework is developed. The results lend support to the view that clustering of large and medium scale specialized firms improves firm performance, while clustering of small scale specialized firms and clustering of diverse firms are not conducive to firm performance. We also find a clear positive association between involvement in exporting activities and firm performance.

Keywords: productivity, externalities, wood furniture industry, indonesia

JEL Classification: D20, R11, R32

Suggested Citation

Andadari, Roos and de Groot, Henri L.F. and Rietveld(Deceased), Piet, Production Externalities in the Wood Furniture Industry in Central Java (July 18, 2012). Tinbergen Institute Discussion Paper No. 12-072/3. Available at SSRN: https://ssrn.com/abstract=2111900 or http://dx.doi.org/10.2139/ssrn.2111900

Roos Andadari (Contact Author)

Satya Wacana Christian University ( email )

Diponegoro Street 52-60
Salatiga, Central Java 50711
Indonesia

Henri L.F. De Groot

VU University Amsterdam - Department of Spatial Economics ( email )

De Boelelaan 1105
Amsterdam, 1081 HV
Netherlands
+31 20 598 6168 (Phone)
+31 20 598 6004 (Fax)

Tinbergen Institute

Gustav Mahlerplein 17
Amsterdam, 1082 MS
Netherlands

Piet Rietveld(Deceased)

affiliation not provided to SSRN

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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