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Product mix changes and performance in Chilean plants

Author

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  • Roberto Alvarez
  • Claudio Bravo-Ortega
  • Lucas Navarro

Abstract

A recent theoretical literature on multiproduct firms has given relevance to the study of the relationship between product mix changes and firm productivity. In this article, taking advantage of a unique data set for manufacturing plants in Chile available for the period 1996–2003, we use matching techniques and a difference-in-difference approach to estimate the causal impact of product mix changes on productivity and other plant-specific outcomes. Our results suggest a positive impact of product mix changes on total factor productivity and labor productivity 2 years after the product mix changes were introduced. We also find positive effects on employment and sales. Nevertheless, this positive effect is mainly driven by those firms that add and drop products at the same time. Our results are in line with recent theoretical developments on productivity determinants for multiproduct firms and illustrate how product creation and destruction are a source of within-firm productivity growth.

Suggested Citation

  • Roberto Alvarez & Claudio Bravo-Ortega & Lucas Navarro, 2016. "Product mix changes and performance in Chilean plants," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 25(6), pages 1001-1017.
    • Handle: RePEc:oup:indcch:v:25:y:2016:i:6:p:1001-1017.
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    Cited by:

    1. Ciarli, Tommaso & Coad, Alex & Moneta, Alessio, 2023. "Does exporting cause productivity growth? Evidence from Chilean firms," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 228-239.
    2. Ishani Tewari & Joshua Wilde, 2019. "Product Scope and Productivity: Evidence from India's Product Reservation Policy," Southern Economic Journal, John Wiley & Sons, vol. 86(1), pages 339-362, July.
    3. Roberto Alvarez & Andrés Zahler, 2014. "Export Mix Changes and Firm Performance: Evidence from Chile," IDB Publications (Working Papers) 85354, Inter-American Development Bank.
    4. Tommaso Ciarli & Alex Coad & Alessio Moneta, 2019. "Exporting and productivity as part of the growth process: Causal evidence from a data-driven structural VAR," LEM Papers Series 2019/39, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.

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