IDEAS home Printed from https://ideas.repec.org/p/chf/rpseri/rp2035.html

The Impact of Emerging Market Competition on Innovation and Business Strategy

Author

Listed:
  • Lorenz Kueng

    (University of Lugano - Faculty of Economics; Swiss Finance Institute; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); Northwestern University - Kellogg School of Management)

  • Nicholas Li

    (University of Toronto - Department of Economics)

  • Mu-Jeung Yang

    (University of Washington - Department of Economics)

Abstract

How do firms in high-income countries adjust to emerging market competition? We estimate how a representative panel of Canadian firms adjusts innovation activities, business strategies, and exit in response to large increases in Chinese imports. Whether firms invest in process or product innovation matters: on average, the number of process innovations declines more strongly than the number of product innovations. In addition, firms that initially pursue process innovation strategies and survive have higher profits ex-post, but are ex-ante more likely to exit. In contrast, firms that initially pursue product innovation strategies have higher profits if they survive, without significant impact on exit. Both empirical patterns are consistent with our theory, which suggests that innovation strategies do not ensure insulation against competitive shocks, but instead increase risk.

Suggested Citation

  • Lorenz Kueng & Nicholas Li & Mu-Jeung Yang, 2020. "The Impact of Emerging Market Competition on Innovation and Business Strategy," Swiss Finance Institute Research Paper Series 20-35, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2035
    as

    Download full text from publisher

    File URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2862734
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. is not listed on IDEAS
    2. Ujjayant Chakravorty & Runjuan Liu & Ruotao Tang & Long Zhao, 2024. "Firm innovation under import competition from low‐wage countries," The World Economy, Wiley Blackwell, vol. 47(5), pages 2063-2093, May.
    3. David Autor & David Dorn & Gordon H. Hanson & Gary Pisano & Pian Shu, 2020. "Foreign Competition and Domestic Innovation: Evidence from US Patents," American Economic Review: Insights, American Economic Association, vol. 2(3), pages 357-374, September.
    4. Douglas L. Campbell & Karsten Mau, 2020. "Trade Induced Technological Change: Did Chinese Competition Really Increase European Innovation?," Working Papers w0262, New Economic School (NES).
    5. Pian Shu & Claudia Steinwender, 2019. "The Impact of Trade Liberalization on Firm Productivity and Innovation," Innovation Policy and the Economy, University of Chicago Press, vol. 19(1), pages 39-68.
    6. Douglas L. Campbell & Karsten Mau, 2019. "Trade Induced Technological Change: Did Chinese Competition Increase Innovation in Europe?," Working Papers w0252, New Economic School (NES).
    7. Boddin, Dominik, 2018. "Imports, Exports and Domestic Innovation," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181640, Verein für Socialpolitik / German Economic Association.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:chf:rpseri:rp2035. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ridima Mittal (email available below). General contact details of provider: https://edirc.repec.org/data/fameech.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.