TY - JOUR

T1 - Product Diversification and Profitability in German Manufacturing Firms

AU - Braakmann, Nils

AU - Wagner, Joachim

PY - 2011/6

Y1 - 2011/6

N2 - We use unique rich data for German manufacturing enterprises to investigate the product diversification - firm performance relationship. We find that an increase in the degree of product diversification has a negative impact on profitability when observed and unobserved firm characteristics are controlled for. The effects are statistically significant and large from an economic point of view. This helps to understand the fact that nearly 40 percent of all enterprises with at least 20 employees are single-product firms according to a detailed classification of products, and that multi-product enterprises with a large number of goods are a rare species.

AB - We use unique rich data for German manufacturing enterprises to investigate the product diversification - firm performance relationship. We find that an increase in the degree of product diversification has a negative impact on profitability when observed and unobserved firm characteristics are controlled for. The effects are statistically significant and large from an economic point of view. This helps to understand the fact that nearly 40 percent of all enterprises with at least 20 employees are single-product firms according to a detailed classification of products, and that multi-product enterprises with a large number of goods are a rare species.

KW - Economics, empirical/statistics

KW - Product diversification

KW - profitability

KW - Germany

KW - Germany

KW - Product diversification

KW - Profitability

UR - http://www.scopus.com/inward/record.url?scp=79960286287&partnerID=8YFLogxK

U2 - 10.1515/jbnst-2011-0303

DO - 10.1515/jbnst-2011-0303

M3 - Journal articles

VL - 231

SP - 326

EP - 335

JO - Jahrbücher für Nationalökonomie und Statistik

JF - Jahrbücher für Nationalökonomie und Statistik

SN - 0021-4027

IS - 3

ER -