On firms’ product space evolution: the role of firm and local product relatedness

Abstract

We explore the role of firm- and local product-specific capabilities in fostering the introduction of new products in the Turkish manufacturing. Firms’ product space evolution is characterised by strong cognitive path dependence that, however, is relaxed by firm heterogeneity in terms of size, efficiency and international exposure. The introduction of new products in laggard Eastern regions, which is importantly linked to the evolution of their industrial output, is mainly affected by firm’s internal product- specific resources. On the contrary, product innovations in Western advanced regions hinge relatively more on the availability of local technological- related competencies.