Does product complexity matter for firms' output volatility?

Daniela Maggioni, Alessia Lo Turco, Mauro Gallegati

Research output: Contribution to journalArticle

11 Citations (Scopus)

Abstract

With this paper we provide the first micro-level evidence on the linkage between firm complexity and volatility. By defining product complexity à la Hausmann and Hidalgo (2009), we find that a higher complexity level of a firm's product basket is associated to a reduction of its output fluctuations. This evidence is robust to the control for omitted variables, sample selection, and to the use of alternative volatility and complexity indicators. Across similar firms, active in different sectors and regions, both technological factors and product market conditions explain the effect of complexity on volatility. However, within narrowly defined sectors and locations, the complexity-volatility nexus fully reflects the role of the human capital content of firms' product baskets.
Original languageEnglish
Pages (from-to)94-109
Number of pages16
JournalJournal of Development Economics
Volume121
DOIs
Publication statusPublished - 2016

Keywords

  • Human capital
  • Technological diversification
  • Product market conditions
  • Output fluctuations

Fingerprint

Dive into the research topics of 'Does product complexity matter for firms' output volatility?'. Together they form a unique fingerprint.

Cite this