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An empirical test of the industry life cycle | SpringerLink
Source: link.springer.com
Article summary:
1. This article tests the hypothesis that certain industry-specific characteristics such as R&D, labor experience, and capital intensity are useful indicators of a product's life cycle stage.
2. The industries were categorized according to their life cycle stage by analyzing the historical trend of real sales for each industry.
3. The structure of seven different industry measures for R&D, labor experience, and capital intensity was then compared across the different stages of the product life cycle, and it was found that they varied in a way consistent with the assumptions in the literature.
Article analysis:
This article provides an empirical test of the industry life cycle hypothesis by examining how international trade and investment behavior is related to a product's life cycle stage. The author uses data from the US Standard Industrial Classification (SIC) system to categorize industries according to their life cycle stage based on their historical trend of real sales. He then compares seven different measures of R&D, labor experience, and capital intensity across these stages to see if they vary in a way consistent with existing literature on this topic.
The article is generally reliable and trustworthy due to its use of empirical evidence from the SIC system and its comparison of multiple measures across different stages of the product life cycle. However, there are some potential biases that should be noted. For example, since this study only focuses on US industries, it may not be applicable to other countries or regions with different economic structures or industrial classifications systems. Additionally, since this study relies on historical data from past sales trends, it may not accurately reflect current market conditions or future trends in international trade and investment behavior. Finally, since this study only examines seven measures related to R&D, labor experience, and capital intensity, there may be other important factors that have been overlooked which could affect international trade and investment behavior at different stages of a product's life cycle.