Creative destruction through innovation bursts

Giuseppe Berlingieri, Maarten De Ridder, Danial Lashkari and Davide Rigo

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: In theories of creative destruction, product innovation is a key driver of aggregate growth. In this paper, we confront the predictions of these theories about product dynamics with empirical patterns in product-level data on the near-universe of French manufacturing firms. We find that the process of product innovation frequently exhibits bursts-episodes in which firms rapidly add multiple products to their portfolio. Such bursts lead to substantial shifts in revenue and explain the majority of the variance in firm-level growth. We introduce a model of firm product innovation compatible with such a process that also nests the canonical models of creative destruction. We show that innovation bursts alter the equilibrium composition of age, size, and innovation efficiency of firms, and further explain the concentration of production among superstar firms. Our model thus enables the joint study of the determinants of industry concentration and growth in a setting consistent with the empirical patterns of product dynamics.

Keywords: productivity; endogenous growth; firms; innovation (search for similar items in EconPapers)
Date: 2025-04-29
New Economics Papers: this item is included in nep-ent and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://cep.lse.ac.uk/pubs/download/dp2095.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp2095

Access Statistics for this paper

More papers in CEP Discussion Papers from Centre for Economic Performance, LSE
Bibliographic data for series maintained by ().