Template-type: ReDIF-Paper 1.0 Author-Name: Chia-Lin Chang Author-Email: changchialin@nchu.edu.tw Author-Workplace-Name: Department of Applied Economics Department of Finance National Chung Hsing University Taichung, Taiwan. Author-Name: Michael McAleer Author-Email: michael.mcaleer@gmail.com Author-Workplace-Name: Department of Quantitative Finance National Tsing Hua University, Taiwan and Econometric Institute, Erasmus School of Economics Erasmus University Rotterdam and Tinbergen Institute, The Netherlands and Department of Quantitative Economics Complutense University of Madrid, Spain. Author-Name: Yu-Chieh Wu Author-Workplace-Name: Department of Applied Economics National Chung Hsing University Taichung, Taiwan. Title: Industrial penetration and internet intensity Abstract: 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. Classification-JEL: D22, L60 Keywords: Industrial penetration, Internet intensity, Sample selection, Incidental truncation. Length: 50 pages Creation-Date: 2016-04 Number: 2016-06 X-File-Ref: http://america.sim.ucm.es/repec/ucm/ref/doicae1606.txt File-URL: https://eprints.ucm.es/id/eprint/37429/1/1606.pdf File-Format: Application/pdf Handle: RePEc:ucm:doicae:1606