Quantitative Analysis of Diversification and Profitability in Japanese Industry

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  • わが国製造業の多角化と収益性の定量分析
  • ワガクニ セイゾウギョウ ノ タカクカ ト シュウエキセイ ノ テイリョウ ブンセキ

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Abstract

This paper analyzes the diversification dynamics of R&D activities and business in the Japanese industry in terms of the entropy index. The 1980s saw extensive diversification in R&D, followed by that in businesses. The directions of diversification, i.e. diversification upstream and downstream, can be analyzed quantitatively using the diversification data in combination with input-output analysis. These directions can be regarded as representing technological opportunities in individual sectors. Results suggest that the opportunities lie downstream for high-tech and scale-intensive industries, and upstream for chemistry-related industries such as textile, pharmaceuticals, and paper and pulp. Case studies resulted in a hypothesis that diversification strategies downstream for higher added values contribute to increased profitability.

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