Product technology adoption and aggregate innovation

Qiugu He, Xuan Luo and Fan Zheng

Journal of Economic Dynamics and Control, 2025, vol. 179, issue C

Abstract: We document that a firm's research and development (R&D) expenditure depends on its product diversity. Combining with the fact that Chinese manufacturers often enter new product markets via technology adoption, we develop a quantitative framework of innovation and technology adoption, allowing firms to expand their product scopes. Firms adopt technologies across multiple fields to expand their knowledge base, which in turn serves as an input for subsequent innovation or adoption. Counterfactual analysis from the 2000s reveals that two-thirds of knowledge privately held by all firms is generated through adoption, accounting for one-third of aggregate innovation.

Keywords: Technology adoption; Innovation capability; Product expansion (search for similar items in EconPapers)
JEL-codes: L16 O34 O47 O53 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:179:y:2025:i:c:s0165188925001435

DOI: 10.1016/j.jedc.2025.105177

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