Transcript - Dr. Martin Gornig - Brussels,16.3. 2007

WP 10: LINKAGES WITH MICRO DATA
Product Diversification and Firm-level Productivity of ICT
Producer
A Micro-Data Analysis for Germany
Bernd Görzig
Martin Gornig
Contents
1.
2.
3.
4.
5.
Research question
Theoretical background
Micro-data access
Measurement of diversification
Preliminary findings
Brussels, March 2007
EU 6. Framework Programme
WP 10: Product Diversification and Firm-level
Productivity of ICT Producer
Research question:
Innovative diversification or concentration on core
competencies -
What strategy is driving productivity of ICT producer?
Brussels, March 2007
EU 6. Framework Programme
WP 10: Product Diversification and Firm-level
Productivity of ICT Producer
Theoretical background:
Traditional view:
Product specialization with concentration on core competencies
reduces fixed cost and increases productivity and profits
(Marshall 1920)
Industrial organisation theory:
Product diversification and innovation is one of the most
important strategies for firms to improve competitiveness and
productivity (Chandler 1978)
Brussels, March 2007
EU 6. Framework Programme
WP 10: Product Diversification and Firm-level
Productivity of ICT Producer
Data sources:
Using register based datasets, this implies: based on
legislation, compulsory answer, full coverage
Two central surveys of the National Statistic Office for
Germany:
•
•
Production Survey - for more than 6.000
manufacturing products based on PRODCOM
Cost Structure Survey – 30.000 firms in
manufacturing
Brussels, March 2007
EU 6. Framework Programme
Production Survey
Registration
code of the firm
Quantity
PRODCOM code
of commodity
Value in €
Brussels, March 2007
EU 6. Framework Programme
WP 10: Product Diversification and Firm-level
Productivity of ICT Producer
In cooperation with the new installed Research Data
Centres in Germany we linked the two surveys on the
firm-level. The result is a product-producer firm-level
panel file.
Advantages of the register based access:
•
•
•
Full coverage of the firms considered
Big enough to conduct data hungry analyses, like panel
econometrics and to apply non-parametric analytical
methods as well
These surveys are the central basis of the NA, therefore
they are principally available in all EU countries
Brussels, March 2007
EU 6. Framework Programme
WP 10: Product Diversification and Firm-level
Productivity of ICT Producer
The measurement of product diversification:
A number of indicators are suggested in the literature.
We use a ‘numbers equivalent’ entropy measure:
 N

E( s )  exp   si ln( 1 / si ) 
 i 1

si = Sales of product i as a share of the sales of all products recorded for the firm
The ‘numbers equivalent’ entropy corresponds to the
number of the products, if the values of all products
have the same share in total sales of a firm.
Brussels, March 2007
EU 6. Framework Programme
Preliminary findings for total manufacturing
2,30
2,25
2,20
2,15
2,10
2,05
2,00
1,95
West Germany
1995
1996
1997
East Germany
1998
1999
2000
2001
Increasing specialisation in the average for all producers in
manufacturing is a net result of cost driven specialisation and
expanding diversification.
Brussels, March 2007
EU 6. Framework Programme
WP 10: Product Diversification and Firm-level
Productivity of ICT Producer
Distinction between ICT producer and NON-ICT
producer:
In a panel analysis for the period from 1995 until 2001
we can compare nearly 7.700 firms
Taking the OECD classification for ICT products, we
can identify roughly 400 firms, producing one or more
ICT products
In the average, about 60 per cent of the product value
of ICT producer can be classified as ICT products.
The highest share, we observe in the industry of
electrical and optical equipment
Brussels, March 2007
EU 6. Framework Programme
Preliminary findings: Productivity in 1000 € per head
Non-ICT producer
ICT producer
1995
2001
Change
in %
1995
2001
Change
in %
Constant no. of products
42,83
56,11
31,0
47,32
56,46
19,3
Reduced no. of products
43,75
56,75
29,7
49,75
64,71
30,1
Increased no. of products
44,18
52,35
18,5
49,40
61,99
25,5
Brussels, March 2007
EU 6. Framework Programme
Preliminary findings: Employed person per enterprise
Non-ICT producer
ICT producer
1995
2001
Change
in %
1995
2001
Change
in %
Constant no. of products
479
417
-12,9
220
228
3,6
Reduced no. of products
3021
2478
-18,0
834
774
-7,2
Increased no. of products
635
649
2,2
579
603
4,1
Brussels, March 2007
EU 6. Framework Programme
WP 10: Product Diversification and Firm-level
Productivity of ICT Producer
Conclusions:
Firms with increasing number of products show a low
growth rate of productivity, but they are expanding
their employment.
These results are in line with other empirical findings:
• Diversification
reduces
the
profit
rates
(Montgomery 1985).
• Diversification and firm growth are highly correlated
(Jovanovic/Gilbert 1993)
Brussels, March 2007
EU 6. Framework Programme
WP 10: Product Diversification and Firm-level
Productivity of ICT Producer
Productivity growth rates of “dynamic” ICT producer,
of both, specialising and diversifying firms, are lower
than for Non-ICT producing firms.
Questions:
Does a different composition of the analysed sets of firms
play a role? - Methodology: Decomposition by industries
and firm size.
We also have to look at the development of individual firms:
Does the strong productivity growth of ICT producer with
constant number of products result from the introduction of
new products before 1995? - Methodology: Treatment
analysis.
Brussels, March 2007
EU 6. Framework Programme
WP 10: LINKAGES WITH MICRO DATA
Product Diversification and Firm-level Productivity of ICT
Producer
A Micro-Data Analysis for Germany
Bernd Görzig
Martin Gornig
Brussels, March 2007
EU 6. Framework Programme