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Product Diversification and Profitability in German Manufacturing Firms

Lookup NU author(s): Professor Nils BraakmannORCiD


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We use unique rich data for German manufacturing enterprises to investigate the product diversification firm performance relationship. We find that an increase in the degree of product diversification has a negative impact on profitability when observed and unobserved firm characteristics are controlled for. The effects are statistically significant and large from an economic point of view. This helps to understand the fact that nearly 40 percent of all enterprises with at least 20 employees are single-product firms according to a detailed classification of products, and that multi-product enterprises with a large number of goods are a rare species.

Publication metadata

Author(s): Braakmann N, Wagner J

Publication type: Article

Publication status: Published

Journal: Jahrbuecher fuer Nationaloekonomie und Statistik

Year: 2011

Volume: 231

Issue: 3

Pages: 326-335

Print publication date: 01/06/2011

ISSN (print): 0021-4027

ISSN (electronic):

Publisher: Lucius und Lucius Verlagsgesellschaft mbH