The Korean housebuilding industry : aspects of growth, efficiency and diversification, 1980-1995
The objective of this thesis is to contribute to the understanding of the development of the housebuilding industry in Korea. Starting from a description of the growth of the industry in the regulated environment, relevant theories are investigated. Based on both theory and evidence, an analytic framework is then developed from which four main research areas are drawn. The first area is an analysis of the structure of the Korean housebuilding business. The focus is on the investigation of governance structure within the housebuilding business and determinants of that structure. The second area is an examination of efficiency in the housebuilding business. Cost structures of the housebuilding business, the input factor relationship, the extent of economies of scale, and productivity are evaluated. The third area is an analysis of the building firms' diversification strategy. The extent of diversification among housebuilding firms, the changing pattern and the motives for that diversification are examined. Finally, the fourth area brings these elements together to investigate the efficiency of the firms' diversified production structure by estimating multi-product cost functions. Interviews and secondary data sources were used to examine the structure of the Korean housebuilding business. For the analyses of the efficiency of the business, multiproduct firms, and the firms' diversification strategy, econometric modelling techniques such as Translog cost function estimation and multivariate regression estimation were employed. The cost structure of the Korean housebuilding business was found to be price inelastic, with relatively low productivity and increasing returns to scale. Firms tended to depend on 'contracting' throughout the production process and also showed diversified production structures. Diversification was motivated by avoiding risks and uncertainty within the housebuilding business and by using retained resources efficiently. The diversification strategy was found to be economically efficient, although the estimated optimum scale suggests that the current scale of the firms may be too large.