John Morrow

(Kings College London)

will give a presentation on

Technological Distance: Grow Up or Grow Out?

Abstract:

Using multiproduct sales patterns and transitive production relationships across firms, we recover a continuous measure of distance between every pair of products and firms to uncover disjoint firm-product clusters. Within clusters, products closest to a firm are the most likely to be adopted and firms closer to potential new products grow and increase their scope faster. In higher sales clusters firms grow up with higher sales and less scope; in higher entrant clusters, firms grow out with lower sales and more scope. Firms with close competitors grow up more slowly but grow out more quickly, and are more likely to merge with these same competitors. Each extra rank of product distance decreases the frequency of adoption by one per cent relative to the base rate and one third of product adoptions are in the Top 10 closest products.