Institutions and diversification: Related versus unrelated diversification in a varieties of capitalism framework

Ron Boschma () and Gianluca Capone

Research Policy, 2015, vol. 44, issue 10, 1902-1914

Abstract: The varieties of capitalism literature has drawn little attention to industrial renewal and diversification, while the related diversification literature has neglected the institutional dimension of industrial change. Bringing together both literatures, the paper proposes that institutions have an impact on the direction of the diversification process, in particular on whether countries gain a comparative advantage in new sectors that are close or far from what is already part of their existing industrial structure. We investigate the diversification process in 23 developed countries by means of detailed product trade data in the period 1995–2010. Our results show that relatedness is a stronger driver of diversification into new products in coordinated market economies, while liberal market economies show a higher probability to move in more unrelated industries: their overarching institutional framework gives countries more freedom to make a jump in their industrial evolution. In particular, we found that the role of relatedness as driver of diversification into new sectors is stronger in the presence of institutions that focus more on ‘non-market’ coordination in the domains of labor relations, corporate governance relations, product market relations, and inter-firm relations.

Keywords: Varieties of capitalism; Institutions; Relatedness; Diversification; Evolutionary economic geography (search for similar items in EconPapers)
JEL-codes: B52 L16 O43 P16 P51 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (129)

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Related works:
Working Paper: Institutions and Diversification: Related versus Unrelated Diversification in a Varieties of Capitalism framework (2015)
Working Paper: Institutions and Diversification: Related versus Unrelated Diversification in a Varieties of Capitalism framework (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:44:y:2015:i:10:p:1902-1914

DOI: 10.1016/j.respol.2015.06.013

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