Relatedness, Coherence, and Coherence Dynamics Empirical Evidence from Italian Manufacturing

Stefano Valvano and Davide Vannoni
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Stefano Valvano: Accenture, http://www.accenture.it/

CERIS Working Paper from CNR-IRCrES Research Institute on Sustainable Economic Growth - Torino (TO) ITALY - former Institute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY

Abstract: This paper investigates the determinants of coherence and coherence change using a sample of Italian leading firms in the period 1993-1996. Following a methodology developed by Teece et al (1994), the observed diversification patterns of our sample firms provide the information required to construct an index of relatedness between pair of sectors, which is in turn used to obtain a measure of firm’s coherence. The econometric analysis highlights that relatedness is higher when sectors share similar technological and marketing characteristics, and when they are positioned at different stages of the productive chain. Analogously, coherence is higher for firms active in industries characterised by similar R&D intensities and exploiting vertical integration links. Firms which enter the group of top 5 leaders are more coherent than the average. From a dynamic perspective, we find that coherence increases for firms with main activities in sectors which are expected to be more affected from EU integration. Finally, the results show that a deepening of vertical integration strategies is good for coherence change, while an increase of diversification brings a reduction in coherence.

Keywords: relatedness; coherence; diversification (search for similar items in EconPapers)
JEL-codes: L2 L21 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2001-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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