The Impact of E-commerce Competition on Product Churning in the Manufacturing Sector: Evidence from Establishments in South Korea

E-commerce has revolutionized the way firms and businesses operate and compete in the world economy. This paper examines the impact of e-commerce competition on product churning in the manufacturing sector, using a unique dataset of Korean manufacturing establishments. Our empirical results suggest that in the era of e-commerce competition, only manufacturers with foreign markets, exporters, are active in creating new products to overcome the competition. Moreover, non-exporters which have only domestic market are active in dropping old products to survive in their product markets. This study contributes to the broader literature on the relationship between competition and product churning by providing evidence that the increase in e-commerce adoption acts as competition through examining how e-commerce participation promotes the creation of new products and product destruction by manufacturers seeking to survive in a more competitive market.