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  • 2.

    upgraded an existing product line/service in the 36 months prior to the survey;

  • 3.

    obtained a new product licensing agreement in the prior 36 months;

  • 4.

    obtained a new quality accreditation (such as ISO 9000) in the prior 36 months;

  • 5.

    discontinued of at least one product line in the prior 36 months.

We also define two composite indexes:

  • 6.

    the average of new product (1/0) and upgrade (1/0);

  • 7.

    the average of new product (1/0), upgrade (1/0), new licensing (1/0), new

accreditation (1/0).

The first measure, introducing a new product line, is the “deepest” of these deep restructuring measures, and is our preferred measure of deep restructuring. Measure 5, discontinuation of a product line, is often used as an indicator of defensive restructuring, but it is also associated with proactive restructuring; reorientation of product lines by firms often simultaneous exit from some markets with entry into others. We therefore include this measure in our analysis here, and the other frequently used measure of defensive restructuring, employment downsizing, is considered as part of growth in next section.

Table VI.1 presents the shares of the samples by region and country that engaged in the two main indicators of deep restructuring, introducing a new product and upgrading an existing product, as well as the measure capturing the discontinuation of products. First, it is immediately apparent that the scale of restructuring activity, as expected, is as high or higher in transition countries than in the mature market economies. The difference is most apparent in the introduction of new products, where the percentage of firms that have engaged in this activity is about 10 percentage points higher in the TEs (III-V) than in Germany and the cohesion countries (I-II). This is not a surprise: the share of micro firms is 46% in Germany and 56% in the cohesion group, but 25-28% in the CIS countries, and smaller firms innovate less since they have, for example, fewer products and fewer product lines. The more frequent introduction of new products in TEs is


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