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Research Article

Supply Network Analysis of the Automobile Industry Using ERGM

Park, Cheolsun, Kang, Arom

Sookmyung Women's University
Sookmyung Women's University

Published: January 2020 · Vol. 49, No. 1 · pp. 129-153

DOI: https://doi.org/10.17287/kmr.2020.49.1.129

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Abstract

This paper analyzes the endogeneous processes that make up the supply network of the automotive industry. A supply network is basically a network in which one company provides goods and information to another. The actual network we observe is a structurally emergent form in which several individual endogenous processes interact. The supply network is a complex adaptation system created by interaction processes. Nevertheless, previous studies have overlooked the interaction of these attributes or the endogenous processes. This is largely due to the limitations of existing research methodologies. Therefore, this study will examine the fundamental aspect of supply network as a complex adaptation system by using a new network analysis method that recognizes interactions in supply network. An Exponential Random Graph Model (ERGM) model was applied to the 2017 Automotive Handbook to explore the underlying processes of the supply network. An ERGM is an novel approach that incorporates endogenous structural effects of network and allows the interactions among various covariates of nodes or links. As a result, the supply network in the automotive industry was basically a chain structure. There were many types of chains that were supplied by suppliers to other companies after its own processing. The basic supply chain did not share intermediaries or skip tiers. In addition, it was difficult to find a structure that directly delivered to customers. In other words, there was no transitivity which can be easily observed in human networks. However, the more intermediaries they share, the more likely they are to have a direct trade relationship. In the case of the purchasers, we confirmed the phenomenon of the rich get richer, which is the possibility of additional transaction when receiving from various companies. As for the suppliers, it is revealed that the possibility of additional delivery is lower as they are delivered to various suppliers due to resource limitations. This study revealed for the first time the endogenous process that constitutes the supply network of the Korean automobile industry. The ERGM model, which recognizes the dependencies between explanatory variables, was used to analyze the fundamental processes of the automotive supply network. Comprehensive inclusion of various explanatory variables to identify the supply relationship in the automotive industry could lead to new conclusions, including the results of previous studies.
Keywords: 자동차산업공급 네트워크