This paper investigates the effect of industrial penetration and internet intensity for Taiwan manufacturing firms, and analyses whether the relationships are substitutes or complements. The sample observations are based on 153,081 manufacturing plants, and covers 26 two-digit industry categories and 358 geographical townships in Taiwan. The Heckman selection model is used to accommodate sample selectivity for unobservable data for firms that use the internet. The empirical results from two-stage estimation show that: (1) a higher degree of industrial penetration will not affect the probability that firms will use the internet, but will affect the total expenditure on internet intensity; (2) for two-digit industries, industrial penetration generally decreases the total expenditure on internet intensity; and (3) industrial penetration and internet intensity are substitutes.

Additional Metadata
Keywords Industrial penetration, Internet intensity, Sample selection, Incidental truncation
JEL Industry Studies: Manufacturing: General (jel L60), Firm Behavior: Empirical Analysis (jel D22)
Persistent URL hdl.handle.net/1765/80110
Series Econometric Institute Research Papers
Note For financial support, the first author wishes to thank the National Science Council, Taiwan, and the third author is grateful to the National Science Council, Taiwan and the Australian Research Council.
Citation
Chang, C-L, McAleer, M.J, & Wu, Y-C. (2016). Industrial Penetration and Internet Intensity (No. EI2016-23). Econometric Institute Research Papers. Retrieved from http://hdl.handle.net/1765/80110