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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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References

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  1. Timothy Dunne & Mark J. Roberts & Larry Samuelson, 1989. "Firm Entry and Post-Entry Performance in the U.S. Chemical Industries," Working Papers 89-6, Center for Economic Studies, U.S. Census Bureau.
  2. Carol Newman & John Rand & Finn Tarp, 2007. "Sector Switching: An Unexplored Dimension of Firm Dynamics in Developing Countries," Discussion Papers 07-22, University of Copenhagen. Department of Economics.
  3. Bernard, Andrew & Redding, Stephen J & Schott, Peter, 2006. "Multi-Product Firms and Product Switching," CEPR Discussion Papers 5708, C.E.P.R. Discussion Papers.
  4. Melitz, Marc J, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," CEPR Discussion Papers 3381, C.E.P.R. Discussion Papers.
  5. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, Econometric Society, vol. 50(3), pages 649-70, May.
  6. 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), Research Institute of Economy, Trade and Industry (RIETI) 07048, Research Institute of Economy, Trade and Industry (RIETI).
  7. Fariñas, Jose C. & Ruano, Sonia, 2005. "Firm productivity, heterogeneity, sunk costs and market selection," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 23(7-8), pages 505-534, September.
  8. Dunne, T. & Roberts, M.J. & Samuelson L., 1988. "Plant Turnover And Gross Employment Flows In The U.S. Manufacturing Sector," Papers, Pennsylvania State - Department of Economics 9-87-7, Pennsylvania State - Department of Economics.
  9. 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, Econometric Society, vol. 50(6), pages 1393-1414, November.
  10. Greenaway, David & Gullstrand, Joakim & Kneller, Richard, 2008. "Surviving globalisation," Journal of International Economics, Elsevier, vol. 74(2), pages 264-277, March.
  11. Kyoji Fukao & Hyeog Ug Kwon, 2004. "Why Did Japan's TFP Growth Slow Down in the Lost Decade?: An Empirical Analysis Based on Firm-Level Data of Manufacturing Firms," Hi-Stat Discussion Paper Series, Institute of Economic Research, Hitotsubashi University d04-50, Institute of Economic Research, Hitotsubashi University.
  12. Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, Econometric Society, vol. 60(5), pages 1127-50, September.
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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, Research Institute of Economy, Trade and Industry (RIETI) 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, Research Institute of Economy, Trade and Industry (RIETI) 13083, Research Institute of Economy, Trade and Industry (RIETI).

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