Although heterogeneity in the performance of firms is a well-established stylized fact, we still lack full understanding of its origins and the reasons why it persists. Instead of assuming that performance differences are exogenous, this paper focuses on two endogenous strategies - innovation...

There is a growing body of literature analyzing empirically the evolution of productivity dispersion at the firm level and its determinants. This paper contributes to this literature by investigating the case of Japanese firms during the so-called “Lost Decade” (1992- 2005), which is still...