Does product complexity matter for firms' TFP?

•We estimate firms’ complexity by the method of reflection.•We relate firms’ complexity to productivity level.•We find that firms’ complexity have a mediating impact between technological factors and firm productivity. This study investigated the complexity-productivity linkage at the firm level. Us...

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Bibliographic Details
Published in:Technological forecasting & social change 2020-11, Vol.160, p.120233, Article 120233
Main Authors: Guan, Shu, Cheng, Liwei
Format: Article
Language:English
Subjects:
Complexity
Knowledge
Manufacturing
Productivity
Specialization
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Summary:•We estimate firms’ complexity by the method of reflection.•We relate firms’ complexity to productivity level.•We find that firms’ complexity have a mediating impact between technological factors and firm productivity. This study investigated the complexity-productivity linkage at the firm level. Using data on a large sample of Chinese manufacturing sector firms from 2000 to 2006, the complexity of a firm was evaluated via product complexity. Product complexity was found to be positively related to a higher productivity level. This finding remained robust after several sensitivity checks, sample selection, and the use of alternative complexity and productivity indicators. Across different sectors and provinces, technological factors explained the effect of complexity on productivity. specialization in more complex products exerted a mediating impact between technological factors and firm productivity.
ISSN:0040-1625
1873-5509
DOI:10.1016/j.techfore.2020.120233