# A Statistical Analysis of Industrial Penetration and Internet Intensity in Taiwan +
## 4 Data and Variables
The formula for calculating the index for industry \(j\) is as follows:  
\[CR4_{j}=\sum_{i=1}^{4}S_{ij}\;0\leq CR4_{j}\leq 1,\]  
where \(s_{ij}\) denotes the market share of firm \(i\) in industry \(j\), and \(s_{ij}\geq s_{ij}\) for all \(i<i\). (3) Geographical Herfindahl-Hirschman index (hereafter \(GHHI\)): This is the Herfindahl index (\(HHI\)) for industrial market concentration combined with a geographical concept that reflects how firms are dispersed within a particular area. The formula for calculating the index is as follows:  
\[GHHI_{j}=\sum_{k=1}^{M}v_{jk}^{2}\;0\leq GHHI_{j}\leq 1,\]  
where \(v_{jk}\) denotes the ratio of the number of firms in industry \(j\) in region \(k\) to the total number of firms in industry \(j\), and \(M\) is the number of regions in industry \(j\), \(k=1,\;2,\;3,\ldots,\;M\). When \(GHHI_{j}\) is close to 1, this means that the firms within the industry are more geographically concentrated; and, when \(GHHI_{jk}\) is close to 0, this means that the firms within the industry are more geographically dispersed. The advantage of \(GHHI_{j}\) is its simplicity of calculation, but its shortcomings include the following: (1) As it is necessary to obtain the market share of an industry for each firm, it is not easy to acquire the data. (2) If \(GHHI_{j}\) is not a part of a neighborhood messaging system, then it is not possible to reveal the differences that are brought about by being either closer to or further from a neighborhood, or to reflect the spatial correlation for different economic activities; so it is only possible to indicate that economic activities are unevenly distributed. (3) \(GHHI_{j}\) can only reveal the spatial concentration for a single industry, without taking into account the spatial distribution characteristics for all industries as a whole. In accordance with the literature that was discussed in Section 2, we select those factors influencing the manufacturers' use of the internet, including industrial characteristics (concentration), manufacturers' characteristics (scale of operations, manufacturers' organization, manufacturers' export intensity), geographical concentration of the industry, geographical location, and the contagion effect for internet technology within the same region. Other explanatory variables include the manufacturer's size (size), with the number of staff that are hired by firms (staff + employees) representing the size of the manufacturer. The export rate (export_rate), calculated as the ratio of the manufacturer's export revenue to total revenue, is used to measure the degree to which manufacturers export their products. The geographical locations (area_city) are divided into county and city categories. When area_city = 1, this means that the manufacturers are located in Keelung City, Hsinchu City, Taichung City, Chiayi City, Tainan City, Taipei City or Kaohsiung City. When area_city = 0, this means that the manufacturers are located in Taipei County, Yilan County, Taoyuan County, Hsinchu County, Maioli County, Taichung County, Changhua County, Nantou County, Yunlin County, Chiayi County, Tainan County, Kaohsiung County, Pingtung County, Taitung County, Hualien County, or Penghu County. The definitions of cities and counties in Taiwan have changed within the past two years, but the empirical findings are not otherwise affected. The group with independent operations is a control variable for firm characteristics. When group = 1, this indicates that the manufacturer is an independent operating unit. When group = 0, this refers to the manufacturer having branches (subsidiaries). Computer expenditure 1 (_computer_1) refers to the manufacturer having itself incurred expenses, in addition to capital expenditure on investment in computer equipment. Computer expenditure 2 (_computer_2) refers to the total expenditure on computer equipment by other manufacturers within the same industry and same area after deducting the expenditure on computer equipment by that particular manufacturer.