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Multi-product firms, product mix changes and upgrading: Evidence from China's state-owned forest areas

Mans Soderbom () and Qian Weng

China Economic Review, 2012, vol. 23, issue 4, 801-818

Abstract: Product selection matters for a firm's productivity and long-run growth. Recent theoretical and empirical studies indicate that an important margin of adjustment to policy reforms is the reallocation of output within firms through changes in product mix decisions. This paper examines the frequency, pervasiveness and determinants of product-switching and upgrading activities in firms located in China's state-owned forest areas during a period of gradual institutional and managerial reforms (2004–2008). We find that changes to the product mix are pervasive and characterized by adding or churning products rather than only shedding products. Moreover, changes in firms’ product mix have made a significant contribution to the aggregate output growth during our sample period. We also find that firms with different characteristics, human capital and market conditions differ in their propensity to diversify and upgrade product mix.

Keywords: Multi-product firms; Product mix changes; Product upgrading; Firm characteristics; China's state-owned forest areas (search for similar items in EconPapers)
JEL-codes: D22 E23 L11 O14 (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:23:y:2012:i:4:p:801-818

DOI: 10.1016/j.chieco.2012.04.002

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China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu

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