Produktdifferenzierung in deutschen Industrieunternehmen 1995 – 2004: Ausmaß und Bestimmungsgründe / Product Diversification in German Manufacturing Enterprises 1995 – 2004: Extent and Determinants

Interest in the theoretical and empirical analysis of multi-product enterprises is growing. This paper uses newly available representative longitudinal data covering the years 1995 to 2004 to document for the first time the extent of product diversification in German manufacturing enterprises and the role of single- and multi-product firms. In 2004 about 60 percent of all enterprises were multi-product firms, producing 4.4 products on average.Multi-product firms are more often found among the larger enterprises. In 2004 the share of multi-product enterprises in total sales and total exports was 81 percent and 84 percent, respectively. Enterprises producing a large number of products are a rare species - only about three percent of all firms produce more than ten different products. This extent of product diversification is rather stable over the time period under consideration. The empirical investigation demonstrates that compared to single-product firms multi-product firms are larger, have a higher productivity, and both a higher human capital intensity and research and development intensity. These characteristics of multi-product firms do exist before single-product enterprises turn to multi-product enterprises. Therefore, and in accordance with the resource view, they can be considered as determinants of product diversification at the firm level.