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Product Switching and Firm Performance in Japan - Empirical Analysis Based on the Census of Manufacturers

  • Atsushi Kawakami

    (Associate Professor, Global Exchange Office for Research and Education, Gakushuin University)

  • Tsutomu Miyagawa

    (Professor, Faculty of Economics, Gakushuin University)

Registered author(s):

    Following Bernard, Redding and Schott (2010), we have constructed product and firm level data on Japanese manufacturing firms using the Census of Manufacturers. Our empirical analysis based on the constructed data shows that multiple-product firms perform better than single-product firms and their labor productivity growth rates are higher. Empirical studies at the industry level show that an unregulated, competitive environment stimulates product switching. At the firm level, product switching behavior improves firm performance, including employment, while the firms that reduce the number of their products see a decline in labor productivity, due to output reduction exceeding the magnitude of the reduction in employment.

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    File URL: http://www.mof.go.jp/english/pri/publication/pp_review/ppr021/ppr021b.pdf
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    Article provided by Policy Research Institute, Ministry of Finance Japan in its journal Public Policy Review.

    Volume (Year): 9 (2013)
    Issue (Month): 2 (March)
    Pages: 287-314

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    Handle: RePEc:mof:journl:ppr021b
    Contact details of provider: Web page: http://www.mof.go.jp/pri/
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    1. Carol Newman & John Rand & Finn Tarp, 2007. "Sector Switching: An Unexplored Dimension of Firm Dynamics in Developing Countries," Trinity Economics Papers tep1007, Trinity College Dublin, Department of Economics.
    2. Jose Manuel Campa & Simi Kedia, 2002. "Explaining the Diversification Discount," Journal of Finance, American Finance Association, vol. 57(4), pages 1731-1762, 08.
    3. Fariñas, 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.
    4. Andrew B. Bernard & Stephen Redding & Peter K. Schott, 2003. "Product choice and product switching," LSE Research Online Documents on Economics 3672, London School of Economics and Political Science, LSE Library.
    5. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May.
    6. Kyoji Fukao & Hyeog Ug Kwon, 2006. "Why Did Japan'S Tfp Growth Slow Down In The Lost Decade? An Empirical Analysis Based On Firm-Level Data Of Manufacturing Firms," The Japanese Economic Review, Japanese Economic Association, vol. 57(2), pages 195-228.
    7. Nishimura, Kiyohiko G. & Nakajima, Takanobu & Kiyota, Kozo, 2005. "Does the natural selection mechanism still work in severe recessions?: Examination of the Japanese economy in the 1990s," Journal of Economic Behavior & Organization, Elsevier, vol. 58(1), pages 53-78, September.
    8. Greenaway, David & Gullstrand, Joakim & Kneller, Richard, 2008. "Surviving globalisation," Journal of International Economics, Elsevier, vol. 74(2), pages 264-277, March.
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