Simultaneity between strategic variables: Production,innovation, and product differentiation |
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Authors: | Mercedes Gumbau Albert |
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Institution: | (1) Universidad de Valencia, Spain |
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Abstract: | This paper aims to analyze the existence of simultaneous effects among the variables production, product differentiation,
and innovation. Microeconomic data from a sample of 2,160 firms are used as a base. Empirical results show that a positive
correlation exists from innovation to product differentiation, thus showing that it is in the process of production itself,
through technical improvements, where product differentiation is determined. On the other hand, no positive effect exists
from product differentiation to innovation, i.e., once technical improvements have been established, firms exchange the barriers
to entry created by brand image for the real barriers established by innovation itself. Lastly, the importance of the firm
size in explaining the other endogenous variables analyzed is confirmed.
This paper has received financial support from the Valencian Institut of Economic Research (IVIE). The study was carried out
within the framework of research program SEC94-1357 of the Comisón Interministerial de Ciencia y Tecnología (CICYT). |
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