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Input Capabilities and Product Adoption

Author

Listed:
  • Swati Dhingra

    (London School of Economics)

  • John Morrow

    (London School of Economics)

  • Johannes Boehm

    (Sciences Po)

Abstract

Multi-product firms dominate production and exporting, and product turnover contributes substantially to aggregate growth. This paper examines the sources of core competencies in product adoption for Indian manufacturing establishments. We show that firms are twice as likely to add products in their Top 5 upstream and downstream sectors. Similarity to a sector's input (but not output) structure predicts product adoption, controlling for average adoption rates of all products of the firm's sector. These results show that vertical linkages drive product adoption and that within sectors, firms' product capabilities depend on economies of scope rather than product market complementarities. Unlike single product firms, multi-product firms can internalize product adoption to focus on products that have upstream or downstream linkages to existing products.

Suggested Citation

  • Swati Dhingra & John Morrow & Johannes Boehm, 2015. "Input Capabilities and Product Adoption," 2015 Meeting Papers 963, Society for Economic Dynamics.
    • Handle: RePEc:red:sed015:963
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    References listed on IDEAS

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