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The Dynamics of Firms’ Product Portfolio in Response to Low-Cost Country Competition : An Empirical Assessment

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  • Claire LELARGE, Benjamin Nefussi

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Abstract

We rely on a new dataset containing detailed information about firm level productiondecomposition and innovation activities in order to investigate whether the observed aggregatereallocation of French production may be driven (at least partly) by firm level product portfoliostrategies, in particular when firms experience a high competitive pressure arising from low-costcountries. Using an instrumental variable strategy, we obtain that firms experiencing a high lowcostcountry competitive pressure are significantly more diversified in their productions, and areinvolved in (either) more frequent or higher reallocation of their product portfolios towardsproducts they were not previously producing. Further analysis shows that more productive firmsonly are able to introduce true product innovations, which may explain why they achieve highersurvival rates.

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  • Claire LELARGE, Benjamin Nefussi, 2008. "The Dynamics of Firms’ Product Portfolio in Response to Low-Cost Country Competition : An Empirical Assessment," Working Papers 2008-27, Center for Research in Economics and Statistics.
    • Handle: RePEc:crs:wpaper:2008-27
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    1. Claire Lelarge & Benjamin Nefussi, 2010. "Les stratégies de portefeuille de produits des entreprises industrielles françaises face à la concurrence des pays à bas coût de production," Économie et Statistique, Programme National Persée, vol. 435(1), pages 31-47.

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