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Industrial targeting and firm performance: An integrated approach to industry selection

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  • Hsu, Bo-Xiang
  • Chen, Yi-Min
  • Yan, Ting-Yu

Abstract

Historical accounts suggest that industrial policies have been beneficial to many countries at all levels of development. This has stimulated debates in the fields of industrial policy and strategic management regarding the rationale for industrial policy and the relationship between the industrial policy and firm-level competitive advantage. However, little research has explored the issues of industry target selection. How to reasonably select target industries for industrial policy ex ante remains a quandary for policymakers and scholars. This study fills this research gap. The authors construct an integrated approach incorporating the panel unit-root method to help governments select target industries ex ante and propose that the larger the persistence of firms’ abnormal returns, the larger the industrial policy effects and the backward linkage effects. The study uses the Taiwanese automobile industry as a case study to further justify the proposed approach. The theoretical framework and empirical findings broaden the industrial targeting literature.

Suggested Citation

  • Hsu, Bo-Xiang & Chen, Yi-Min & Yan, Ting-Yu, 2021. "Industrial targeting and firm performance: An integrated approach to industry selection," Technological Forecasting and Social Change, Elsevier, vol. 162(C).
    • Handle: RePEc:eee:tefoso:v:162:y:2021:i:c:s0040162520312221
    DOI: 10.1016/j.techfore.2020.120396
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