The paper introduces a novel indicator of technological relatedness across firms. It considers both imported inputs and exported
products to assess the similarity of firms in terms of their technological capabilities in Austria. The indicator captures
technological similarity more closely than measures relying solely on exported products or overlapping industry classes. Descriptive
results indicate that companies that are more closely related in the import-export product space also export and import more
complex products. More complex products in turn are related to higher labor productivity levels. The impact of the proposed
measure for bilateral corporate coherence on the production costs of firms is assessed by firm-level quadratic cost functions.
The results indicate that bilateral coherence and related spillovers have a significant negative impact on the total cost
of production of firms on average. The associated cost reduction effect follows a mildly U-shaped pattern. The paper also
assesses the impact of bilateral coherence on the margins of trade at the firm level. The results indicate that firms with
a higher bilateral coherence, and associated spillovers, have a positive impact on the diversification of both the export
portfolio and imported inputs. The impacts on intensive margins and both import and export concentration are more ambiguous.
JEL-Codes:I25, O11, O14
Keywords:Corporate coherence, spillovers, economies of scope, extensive margin, intensive margin, trade, cost function
Research group:Industrial, Innovation and International Economics