Abstract
Firms strategically achieve competitiveness through either operational efficiency or superior asset utilization, thereby impacting their responsiveness to innovations in profit margin or in asset turnover. We show that firms specializing in operating efficiency react more positively to shocks in profit margin than firms specializing in asset utilization. Firms may also decide to co-locate in an industry cluster, hoping to capture the positive externalities of input sharing, labor pooling and knowledge spill-over. We show that co-located firms are in a better position to benefit from innovations in asset turnover as they benefit from input sharing and labor pooling.
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Dewally, M., Shao, Y. Industry cluster and performance sensitivity. J Econ Finan 39, 824–844 (2015). https://doi.org/10.1007/s12197-014-9288-0
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DOI: https://doi.org/10.1007/s12197-014-9288-0