The Korean Journal of Economic Studies
Effect of Online Sales on Growth: Evidence from Korean Manufacturing Establishment
Donghan Shin (Nam Duck Woo Economic Research Institute) and Janghee Cho (Jeju National University)Year 2022Vol. 70No. 3
In this paper, we study the effect of online participation of manufacturing establishments on sales and employment growth. The statistical business register (from Statistics Korea) and the mail-order registration data (from Korea Fair Trade Commission) are combined to track the employment and sales growth of the universe of both online and offline manufacturing establishments. Using the sample constructed by propensity score matching, we find online market participation of manufacturing establishments leads to a 6% higher growth in sales per workers compared to offline manufacturers. Sales growth exceeding employment growth drives this result, confirming the market expansion effect of online participation. While the market expansion effect is the most prominent among manufacturers that have owners younger than 50, that have more than 4 workers, or that produce consumer goods, other online manufacturing establishments also exhibit statistically significant and positive growth effect. Our results imply that the market expansion effect of online sales can help even the manufacturers previously regarded as less competitive.