Firm Scope and Spillovers from New Product Innovation: Evidence from Medical Devices

43 Pages Posted: 22 Oct 2018

See all articles by Matthew Grennan

Matthew Grennan

University of Pennsylvania - The Wharton School; National Bureau of Economic Research (NBER)

Charu Gupta

University of Pennsylvania - The Wharton School

Mara Lederman

University of Toronto - Rotman School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: October 2018

Abstract

When firms span related product categories, spillovers across categories become central to firm strategy and industrial policy, due to their potential to foreclose competition and affect innovation incentives. We exploit major new product innovations in one medical device category, and detailed sales data across related categories, to develop a causal research design for spillovers at the customer level. We find evidence of spillovers, primarily associated with complementarities in usage. These spillovers imply large benefits to multi- vs. single-category firms, accounting for nearly one quarter of sales in the complimentary category (equivalent to four percent of revenue in the focal category).

Suggested Citation

Grennan, Matthew and Gupta, Charu and Lederman, Mara, Firm Scope and Spillovers from New Product Innovation: Evidence from Medical Devices (October 2018). NBER Working Paper No. w25183, Available at SSRN: https://ssrn.com/abstract=3270763

Matthew Grennan (Contact Author)

University of Pennsylvania - The Wharton School ( email )

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HOME PAGE: http://www.wharton.upenn.edu/faculty/grennan.cfm

National Bureau of Economic Research (NBER) ( email )

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Charu Gupta

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Mara Lederman

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

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