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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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    1. Andreoni, Antonio, 2014. "Structural learning: Embedding discoveries and the dynamics of production," Structural Change and Economic Dynamics, Elsevier, vol. 29(C), pages 58-74.
    2. Laura Rondi & Davide Vannoni, 2005. "Are EU Leading Firms Returning to Core Business? Evidence on Refocusing and Relatedness in a Period of Market Integration," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 27(2), pages 125-145, September.
    3. Ricardo A. López & Jens Südekum, 2009. "Vertical Industry Relations, Spillovers, And Productivity: Evidence From Chilean Plants," Journal of Regional Science, Wiley Blackwell, vol. 49(4), pages 721-747, October.
    4. Ann E. Harrison & Leslie A. Martin & Shanthi Nataraj, 2013. "Learning versus Stealing: How Important Are Market-Share Reallocations to India's Productivity Growth?," World Bank Economic Review, World Bank Group, vol. 27(2), pages 202-228.
    5. Ann E. Harrison & Leslie A. Martin & Shanthi Nataraj, 2013. "Learning versus Stealing: How Important Are Market-Share Reallocations to India's Productivity Growth?," World Bank Economic Review, World Bank Group, pages 202-228.
    6. Lall, Somik V. & Shalizi, Zmarak & Deichmann, Uwe, 2004. "Agglomeration economies and productivity in Indian industry," Journal of Development Economics, Elsevier, vol. 73(2), pages 643-673, April.
    7. Leonardo Iacovone & BeataS. Javorcik, 2010. "Multi-Product Exporters: Product Churning, Uncertainty and Export Discoveries," Economic Journal, Royal Economic Society, vol. 120(544), pages 481-499, May.
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