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Brachert, M., Kubis, A., & Titze, M. (2011). Related Variety, Unrelated Variety and Regional Functions: Identifying Sources of Regional Employment Growth in Germany from 2003 to 2008 (No. 15/2011). IWH Discussion Papers.

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• TITLE: How do Related and Unrelated Varieties Impact Firm Economic Growth in China: An Empirical Analysis with Endogeneity

  AUTHORS: Yuting Jiang

  KEYWORDS: Agglomeration, Firm Economic Growth, Related and Unrelated Variety

  JOURNAL NAME: Advances in Applied Sociology, Vol.14 No.6, June 18, 2024

  ABSTRACT: Using a sample of 84,868 Chinese manufacturing firms operating in the period 2006-2013, we analyze whether related and unrelated variety—measured by entropy method, affects firms’ economic performance. Our results show that, with Heckman (1979) two-step sample selection model correcting only for sample-selection bias, unrelated variety has a negative and statistically significant impact. If we also correct the endogeneity of the main explanatory variables—related and unrelated variety, by employing Bartik’s (1991) shift-share approach, we find that they become insignificant. We find a positive effect for related variety and negative effect for unrelated variety only if we consider highly-developed Chinese regions. Finally, we find that related variety has a positive effect only in the case of large firms.