“The Dynamics of Firms’ Product Portfolio in Response to Low-Cost Country Competition : An Empirical Assessment”
AbstractWe rely on a new dataset containing detailed information about firm level productiondecomposition and innovation activities in order to investigate whether the observed aggregatereallocation of French production may be driven (at least partly) by firm level product portfoliostrategies, in particular when firms experience a high competitive pressure arising from low-costcountries. Using an instrumental variable strategy, we obtain that firms experiencing a high lowcostcountry competitive pressure are significantly more diversified in their productions, and areinvolved in (either) more frequent or higher reallocation of their product portfolios towardsproducts they were not previously producing. Further analysis shows that more productive firmsonly are able to introduce true product innovations, which may explain why they achieve highersurvival rates.
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Bibliographic InfoPaper provided by Centre de Recherche en Economie et Statistique in its series Working Papers with number 2008-27.
Date of creation: 2008
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