Product versus Process: Innovation Strategies of Multi-Product Firms
研究多产品企业如何根据行业差异化程度选择产品创新或工艺创新，发现差异化行业更倾向产品创新，同质化行业更倾向工艺创新，且市场开放会激励创新。
We investigate the effects of better access to foreign markets on innovation strategies of multiproduct firms in industries with different scope for product differentiation. Industry-specific demand and cost linkages induce a distinction between the returns to innovation. In differentiated industries, cannibalization is lower and firms invest more in product innovation. In homogeneous industries, firms internalize intra-firm spillovers and invest more in process innovation. Using firm-level data and large exchange rate devaluations, we show that better access to foreign markets increases the incentive to innovate. However, we exploit differential effects across industries and show that the innovation strategies depend on the scope of differentiation.