Data and Code for: Product Innovation, Product Diversification, and Firm Growth: Evidence from Japan’s Early Industrialization

Principal Investigator(s): View help for Principal Investigator(s) Serguey Braguinsky, University of Maryland; Atsushi Ohyama, Hitotsubashi University; Tetsuji Okazaki, University of Tokyo; Chad Syverson, University of Chicago. Booth School of Business

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Project Citation:

Braguinsky, Serguey, Ohyama, Atsushi, Okazaki, Tetsuji, and Syverson, Chad. Data and Code for: Product Innovation, Product Diversification, and Firm Growth: Evidence from Japan’s Early Industrialization. Nashville, TN: American Economic Association [publisher], 2021. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2021-11-19. https://doi.org/10.3886/E145421V1

Project Description

Summary:

We explore how firms grow by adding products. We leverage detailed data from Japan’s cotton spinning industry at the turn of the last century to do so. This setting allows us to fully characterize the type of differentiation (vertical or horizontal) of new product introductions as well as whether the product is within or outside of the firm’s prior technological capabilities. We find that trying to introduce innovative products beyond the firm’s previous technologically feasible set, even if such trials fail, is a key to firm growth. Indeed, it mostly facilitates growth through the firm’s later success in horizontal product diversification. In long-term outcomes, the right tail of the firm size distribution becomes dominated by firms first moved into technologically challenging products and then later applied their newly acquired technical competence to horizontal expansion of their product portfolios. Two mechanisms through which this knowledge transfer occurs are greater production system flexibility and higher product appeal to downstream buyers.

Scope of Project

Subject Terms: innovation; growth; product variety choice; industrialization; Japan; technology choice; product innovation; product diversification

JEL Classification:
      D20 Production and Organizations: General
      L00 Industrial Organization: General
      N80 Micro-Business History: General, International, or Comparative
      O30 Innovation; Research and Development; Technological Change; Intellectual Property Rights: General

Geographic Coverage: Japan

Universe: Cotton spinning industry firms operating in Japan between 1893-1914

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V1 [2021-11-19]

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