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Product Switching and Firm Performance in Japan

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  • KAWAKAMI Atsushi
  • MIYAGAWA Tsutomu

Abstract

Following Bernard, Redding and Schott (2010), we have constructed product and firm level data on Japanese manufacturing firms using the Census of Manufactures. Employing this data, we have found that multiple-product firms show better performance than single-product firms and product switching behavior in incumbent firms leads to greater output growth in the Japanese manufacturing sector, more so than in entry and exit. Empirical studies at industry level show that an unregulated, competitive environment stimulates product switching. At firm level, labor productivity growth and an unregulated, competitive environment encourage product switching behavior. Such product switching behavior improves firm performance in the areas of output, employment and labor productivity, etc.

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Bibliographic Info

Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 10043.

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Length: 40 pages
Date of creation: Sep 2010
Date of revision:
Handle: RePEc:eti:dpaper:10043

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  1. Carol Newman & John Rand & Finn Tarp, 2007. "Sector Switching: An Unexplored Dimension of Firm Dynamics in Developing Countries," The Institute for International Integration Studies Discussion Paper Series iiisdp230, IIIS.
  2. Dunne, T. & Roberts, M.J. & Samuelson, L., 1988. "Firm Entry And Post-Entry Performance In The U.S. Chemical Industries," Papers 0-88-4, Pennsylvania State - Department of Economics.
  3. Mark J. Melitz, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," NBER Working Papers 8881, National Bureau of Economic Research, Inc.
  4. FariƱas, Jose C. & Ruano, Sonia, 2005. "Firm productivity, heterogeneity, sunk costs and market selection," International Journal of Industrial Organization, Elsevier, vol. 23(7-8), pages 505-534, September.
  5. Andrew Bernard & Stephen Redding & Peter Schott, 2008. "Multi-Product Firms and Product Switching," Working Papers 08-24, Center for Economic Studies, U.S. Census Bureau.
  6. Kyoji Fukao & Hyeog Ug Kwon, 2005. "Why Did Japan's TFP Growth Slow Down in the Lost Decade? An Empirical Analysis Based on Firm-Level Data of Manufacturing Firms," Discussion papers 05004, Research Institute of Economy, Trade and Industry (RIETI).
  7. MORIKAWA Masayuki, 2007. "Is Productivity in the Service Industries Low? An Analysis Using Firm-level Data on the Dispersion and the Dynamics of Productivity (Japanese)," Discussion Papers (Japanese) 07048, Research Institute of Economy, Trade and Industry (RIETI).
  8. Caves, Douglas W & Christensen, Laurits R & Diewert, W Erwin, 1982. "The Economic Theory of Index Numbers and the Measurement of Input, Output, and Productivity," Econometrica, Econometric Society, vol. 50(6), pages 1393-1414, November.
  9. Dunne, Timothy & Roberts, Mark J & Samuelson, Larry, 1989. "Plant Turnover and Gross Employment Flows in the U.S. Manufacturing Sector," Journal of Labor Economics, University of Chicago Press, vol. 7(1), pages 48-71, January.
  10. Greenaway, David & Gullstrand, Joakim & Kneller, Richard, 2008. "Surviving globalisation," Journal of International Economics, Elsevier, vol. 74(2), pages 264-277, March.
  11. Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, vol. 60(5), pages 1127-50, September.
  12. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May.
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Cited by:
  1. KAWAKAMI Atsushi & MIYAGAWA Tsutomu & TAKIZAWA Miho, 2011. "Revisiting Productivity Differences and Firm Turnover: Evidence from product-based TFP measures in the Japanese manufacturing industries," Discussion papers 11064, Research Institute of Economy, Trade and Industry (RIETI).
  2. MORIKAWA Masayuki, 2013. "Business Restructuring of Japanese Firms: Structural changes during the "Lost Decades"," Discussion papers 13083, Research Institute of Economy, Trade and Industry (RIETI).

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