Institutions and diversification: Related versus unrelated diversification in a varieties of capitalism framework

Ron Boschma, Gianluca Capone

Research output: Contribution to journalArticlepeer-review

Abstract

The varieties of capitalism literature has drawn little attention to industrial renewal and diversification, while the related diversification literature has neglected the institutional dimension of industrial change. Bringing together both literatures, the paper proposes that institutions have an impact on the direction of the diversification process, in particular on whether countries gain a comparative advantage in new sectors that are close or far from what is already part of their existing industrial structure. We investigate the diversification process in 23 developed countries by means of detailed product trade data in the period 1995-2010. Our results show that relatedness is a stronger driver of diversification into new products in coordinated market economies, while liberal market economies show a higher probability to move in more unrelated industries: their overarching institutional framework gives countries more freedom to make a jump in their industrial evolution. In particular, we found that the role of relatedness as driver of diversification into new sectors is stronger in the presence of institutions that focus more on 'non-market' coordination in the domains of labor relations, corporate governance relations, product market relations, and inter-firm relations. (C) 2015 Elsevier B.V. All rights reserved.
Original languageEnglish
Pages (from-to)1902-1914
JournalResearch Policy
Volume44
Issue number10
DOIs
Publication statusPublished - 2015

Subject classification (UKÄ)

  • Economic Geography

Free keywords

  • Evolutionary economic geography
  • Diversification
  • Relatedness
  • Institutions
  • Varieties of capitalism

Fingerprint

Dive into the research topics of 'Institutions and diversification: Related versus unrelated diversification in a varieties of capitalism framework'. Together they form a unique fingerprint.

Cite this