Product versus Process: Innovation Strategies of Multiproduct Firms

• 成果类型: Article
• 署名作者: Flach, Lisandra; Irlacher, Michael
• 署名单位: University of Munich; Leibniz Association; Ifo Institut; Centre for Economic Policy Research - UK
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MICROECONOMICS
• ISSN/ISSBN: 1945-7669
• DOI: 10.1257/mic.20150272
• 发表日期: 2018
• 页码: 236-277
• 关键词: research-and-development; scope adjustment; TRADE; COMPETITION; MARKETS; IMPACT; cost

摘要

We investigate the effects of better access to foreign markets on innovation strategies of multiproduct firms in industries with different scope for product differentiation. Industry-specific demand and cost linkages induce a distinction between the returns to innovation. In differentiated industries, cannibalization is lower and firms invest more in product innovation. In homogeneous industries, firms internalize intra-firm spillovers and invest more in process innovation. Using firm-level data and large exchange rate devaluations, we show that better access to foreign markets increases the incentive to innovate. However, we exploit differential effects across industries and show that the innovation strategies depend on the scope of differentiation.