Renewal of Companies: Industry Switching as a Form of Structural Change

Natalia Kuosmanen, Timo Kuosmanen, Jyrki Ali-Yrkkö and Mika Pajarinen

No 126, ETLA Reports from The Research Institute of the Finnish Economy

Abstract: Abstract The contributions of entry and exit of firms to aggregate productivity growth are well-established in the literature. However, the impact of industry switching of firms on productivity remains overlooked. The purpose of this report is to shed new light on the role of industry switching as a form of structural change. The results show that industry switching is very common and occurs in all industries in Finland, especially during the times of recession. Industry switching has had both positive and negative contributions to aggregate productivity in different periods. Intra-industry switching had mainly negative impact on productivity growth suggesting that switching was taken as a strategy to survive. On the other hand, inter-industry switching had mainly positive impact on productivity growth, suggesting that switching was associated with new products and technologies. The study also looked at the structural developments of industries relevant for combating climate change. As emission reduction targets require companies to renew their product and service offerings, climate policy can help guide companies to switch industries. However, in the industries examined in the study, restructuring has so far taken place mainly through entry and exit.

Keywords: Industrial structure; Industry switching; Labor productivity; Productivity decompositions (search for similar items in EconPapers)
JEL-codes: C81 D22 L16 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2022-03-28
New Economics Papers: this item is included in nep-ban, nep-eff and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.etla.fi/wp-content/uploads/ETLA-Raportit-Reports-126.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rif:report:126

Ordering information: This working paper can be ordered from
https://www.etla.fi/ ... f-structural-change/

Access Statistics for this paper

More papers in ETLA Reports from The Research Institute of the Finnish Economy Contact information at EDIRC.
Bibliographic data for series maintained by Kaija Hyvönen-Rajecki ().