Multinationals, Technology, and the Introduction of Varieties of Goods

37 Pages Posted: 25 May 2006 Last revised: 10 Apr 2010

See all articles by Irene Brambilla

Irene Brambilla

Universidad Nacional de La Plata

Date Written: May 2006

Abstract

Multiproduct firms and product turnover are widespread phenomena. This paper develops a theoretical framework that links advantages in R&D and variable costs with firm's ability to expand its portfolio of products. The framework is then applied to explain systematic differences in product introduction by affiliates of multinationals and firms that only operate domestically. Using firm-level data for the Chinese manufacturing sector during 1998-2000, I compare the performance of foreign and domestic firms in terms of the new varieties that they introduce and I estimate the quantitative relevance of technological factors as a determinant.I find that firms with more than 50 percent of foreign ownership introduce on average more than twice as many more new varieties of goods as private domestic firms. Advantages in productivity account for 32 to 62 percent of the difference in the number and sales of new varieties, while advantages in the cost of development account for 3 to 6 percent of these differences.

Suggested Citation

Brambilla, Irene, Multinationals, Technology, and the Introduction of Varieties of Goods (May 2006). NBER Working Paper No. w12217, Available at SSRN: https://ssrn.com/abstract=902569

Irene Brambilla (Contact Author)

Universidad Nacional de La Plata ( email )

La Plata, Buenos Aires 1900
Argentina

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