Decomposing firm-level productivity growth and assessing its determinants: evidence from the Americas

This paper provides novel empirical evidence on productivity growth in the manufacturing sector in Chile, Colombia, Mexico and Peru. Relying on plant-level data, we first decompose productivity and productivity growth into plant-level growth and market allocation forces. While the average productivity of the survivors is higher than the overall contribution of reallocation forces, during recessions the inverse is true and reallocation gives a positive, albeit small, contribution to aggregate productivity growth. Next we analyze how policy measures can determine allocative efficiency levels and growth, and find important scope for action on education, financial regulation, and structural reforms.     

FDI spillovers on firm survival in Italy: absorptive capacity matters!

The aim of this paper is to explore the effects of spillovers driven by competition and forward and backward linkages between foreign firms and Italian firms. We adopt the firm dynamics framework, which allows us to test the impact of foreign firms’ activity on the probability that local firms will exit. The empirical analysis relies on continuous survival models (Cox proportional hazard models) and uses a representative firm level database from the period of 2002–2010 with data concerning more than 4,000 Italian manufacturing firms. Our estimates regarding the whole sample show that horizontal and vertical linkages have no impact on firm survival. To further test this finding, we perform a more disaggregated analysis that allows for heterogeneity across firms and sectors. We obtain evidence that the effects of FDI spillovers on firm survival follow specific patterns at both the intra- and inter-industry levels based on differences in productivity between Italian firms and foreign firms and on the technological intensity of the industry. Foreign firms’ activity reduces the exit probability of competitors and of downstream local customers (through forward linkages) with low productivity gap but has no impact on high productivity gap firms. Firms in high technology intensive sectors do not benefit from horizontal FDI while in low and medium technology sectors they do. Differences in absorptive capacity may explain these results. However, we also find that vertical linkages with foreign firms in the upstream supplying industries spur firm duration in medium and high tech sectors.     

Productivity and openness: firm level evidence in Brazilian manufacturing industries

This study investigates the productivity of Brazilian manufacturing industries, particularly addressing the influence of liberalization on productivity. We first calculate total factor productivity (TFP) by estimating the stochastic frontier production function and the inefficiency determination equation simultaneously. Then TFP growth rates are regressed on openness-related variables and other firm characteristics. The results show that firm openness to the world is a crucial determinant of their productivity. Data used for this study were obtained from the Investment Climate Survey, provided by the World Bank.     

China��s exports in information communication technology and its impact on Asian countries

This paper analyzes the export growth of China??s information communication technology (ICT) products in two major markets Japan and the US from 1995 to 2008 and its competition with six East Asian countries: Indonesia, Malaysia, Philippines, Thailand, Singapore and Korea. The analysis shows that China has emerged as the largest single supplier of ICT products to both markets. By 2008, China??s exports accounted for 44 and 38% of total Japanese and the US ICT imports respectively. On the other hand, market shares of the six East Asian countries either remained stagnant or decreased substantially. The analysis by destination markets and by product categories indicates that, there exist significant negative correlations between market shares of China and that of the six East Asian countries, implying that the rapid expansion of China??s ICT exports crowded out exports of its East Asian competitors.     

Internal capabilities,external structural holes network positions,and knowledge creation

Social network theory suggests that firms bridging structural holes by connecting disconnected partners in a network benefit from timely access to diverse knowledge. However, the existing literature reports mixed evidence with regard to the performance implications of this view. Our study examines how a firm’s diverse knowledge base and knowledge-processing capabilities affect knowledge creation when a firm bridges multiple structural holes in an inter-firm network. The model is tested on a sample of 191 firms in high-technology industries. The dependent variable, knowledge creation, was measured by the number of patents generated. Results show that when a firm spans multiple structural holes, its diverse technological knowledge facilitates knowledge creation. However, when a firm already possesses well-developed knowledge acquisition capabilities, spanning structural holes reduces knowledge creation. This paper suggests that internal knowledge base and knowledge-processing capabilities determine the impacts of external network positions on firm knowledge creation. It provides implications on how a firm best capitalizes on external network positions.     

Productivity growth, trade and FDI nexus: evidence from the Canadian manufacturing sector

Using the confined exponential and logistic models of technology diffusion, this paper investigates the roles played by international trade and FDI in explaining productivity growth through both technology transfer and domestic innovation, with the technology transfer also occurring independently. Using panel data on Canadian manufacturing industries, we first find a robust role for the autonomous and international trade embodied technology transfer in explaining TFP growth. Second, international trade and FDI (as well as research and development) all contribute to productivity growth through the rate of innovation. Finally, we find that the exponential and logistic models of technology diffusion may have different implications for the growth dynamics in a technologically lagging country.     

Industry and ownership structure

The paper examines the relationship between main industry and corporate ownership structures using a unique database covering the 100 largest companies in each of 12 European countries. The predictive power of economic ownership theory is tested and generally supported. We find evidence that industry affiliation has a significant effect on ownership structure after controlling for national differences. The industry effect is found to be related to differences in firm size, industry growth, earnings volatility, capital, and research intensity.     

Do Computers Make Output Harder to Measure?

In recent years, U.S. productivity growth accelerated sharply in manufacturing, but has remained sluggish in the most computer-intensive service industries. This paper explores the possibility that information technology is generating output that is increasingly hard to measure in non-manufacturing industries, which contributes to the divergence in industry productivity growth rates. Our results suggest that measurement error in 13 computer-intensive, non-manufacturing industries increased between 0.74 and 1.57 percentage points per year in the 1990s, which understates annual aggregate productivity growth by 0.10 to 0.20 percentage points in the 1990s. This adds to an estimated 0.22 to 0.30 percentage point error from the increasing share of aggregate output in these hard-to-measure industries. Thus, increasing measurement problems may understate aggregate productivity growth by an additional 0.32 to 0.50 percentage points per year in the 1990s and play an important role in understanding recent productivity trends at the industry level.     

Linking technological and educational level diversities to innovation performance

In this study, we explore the extent to which diversity of educational levels among research scientists and engineers (RSEs) in the context of a firm’s level of technological diversity influences innovation performance. We used data from the 2004–2008 National R&D Survey in Singapore. The results from 366 firms across different industries indicate that when a firm’s technological domains are heterogeneous, those firms with an RSE workforce comprising similar educational levels have positive innovation performance, measured as the number of patent applications, while those comprising diverse educational levels have negative innovation performance. Our further exploration of the positive interaction between technological domain heterogeneity and similarity of educational levels suggests that firms that had a high ratio of RSEs with lower educational levels had more positive patent outcomes compared to those that had a high ratio of RSEs with higher educational levels. The results show that there are limits to the strength of technological diversity in a firm’s absorptive capacity as explained by organizational demography.     

The Puzzle of Firm Performance in China: An Institutional Explanation

China has achieved phenomenal economic growth in an institutional environment that defies conventional economic rationales. Researchers offer different theories to explain this puzzle. But so far, due to the lack of data, little effort has been made to test these theories at the firm level. We develop a framework of endogenous institutional change to explain this puzzle and we test our framework with firm-level data. We argue that the decentralization from the central to the local governments and from government to firms are the driving forces behind China's institutional changes that have shaped the roles of government and market, which in turn significantly affect firm performance. We then submit our theory to a vigorous empirical test using data from China's industrial census, covering all 2000 counties and over 500 manufacturing industries. The test shows that two results of decentralization, the involvement of low-level governments in business and the process of privatization, positively affect firm performance.     

Do Ukrainian Firms Benefit from FDI?

All countries are eager to attract as much foreign direct investments (FDI) as possible. At the same time FDI may have not only positive, but also negative economic effects for receiving countries. Positive effects are associated with technology transfer, efficient allocation of resources, and training of domestic workers. However, the entry of foreign firms could, e.g., lead to a decrease of labor productivity at domestic firms, which is a negative effect. The main purpose of this paper is to estimate direct and indirect effects of FDI. First, we test for direct influence of foreign direct investments on firms’ performance, where the latter is estimated alternatively as labor productivity and as exports. FDI notably increases both labor productivity and export volumes. Second, we look for spillover or indirect effects. There is statistical evidence that the levels of FDI in certain regional industries are associated with higher performance indicators of firms’ not receiving FDI in those same regional industries.     

Ownership Structure as Corporate Governance Mechanism: Evidence from Chinese Listed Companies

This paper examines the cross-sectional relation between ownership structure and corporate performance of a sample of 434 manufacturing firms listed on the Chinese stock exchange. Following the agency theory and taking other influential factors into account, such as firm size, leverage ratio, variance of sales, growth of sale and firm age, the results suggest that there is a strong relation between ownership concentration and corporate performance, measured by Tobin's Q. A further classification of owners reveals that while shares held by state play a negative role in corporate governance, domestic institutional and managerial shareholdings improve the firms' performance.     

Antitrust, Marketing Cooperatives, and Market Power

Marketing cooperatives are common in agricultural markets. This article explores their price and welfare effects and relates to antitrust legislation in the United States, the European Union, and some of the EU member states-in particular, Sweden. Welfare is higher with a monopoly cooperative than with a profit-maximizing monopoly, if the scope for price discrimination is small and if the world-market price is low relative to the domestic price. As the world-market price rises (or as price discrimination becomes more important), the welfare effect is reversed. The price-discrimination effect suggests that, as a marketing cooperative integrates vertically, welfare may fall. These results carry over to a duopoly with a cooperative firm and a profit-maximizing firm. In such a duopoly, the cooperative behaves more aggressively and obtains a larger market share. Empirical evidence supports these conclusions.     

Determinants of Export Performance: Evidence from Chinese Industries

This paper empirically investigates the determinants of Chinese export performance using cross-sectional data at the industry level. We find that the export performance of different industries is significantly influenced by labour costs, foreign direct investment (FDI) and firm size, and thus open to a variety of explanations offered by traditional and new trade theories. These findings indicate that Chinese industrial sectors have realised their comparative advantages, but point to the need for the industries to upgrade their export structure in order to sustain growth.     

Robotisation of the manufacturing industries in the EU: Convergence or divergence?

This paper investigates whether convergence or divergence of robot densities in the manufacturing industries of 24 EU countries occurred over the period from 1995 to 2015. An answer to this question permits immediate conclusions with regard to the success of convergence of labour productivities within the manufacturing industries of the EU, since it is expected that the use of robots will contribute to the growth of labour productivity. The empirical analysis is based on the robot data of the International Federation of Robotics and uses the convergence testing approach proposed by Rodrik (Q J Econ 128(1):165–204, 2013). Taking all results together, empirical evidence points to non-convergence of robot densities for a first period from 1995 to 2005, while there is relatively fast conditional as well as unconditional convergence for the second period from 2005 to 2015.

     

The nature of innovation in emerging industries in China: an exploratory study

In China, traditional manufacturing industries have been world leaders in low-cost manufacturing for overseas multinationals. It is well-known that these “traditional industries” depend on overseas parent firms for innovation. In recent decades, China’s desire is to encourage and promote innovation-based emerging industries within its borders. By definition, “emerging industries” are composed of domestic Chinese firms without an overseas parent firm. We know very little about the innovation practices in these emerging Chinese industries; we hypothesize that the innovation practices in these firms are quite different from traditional Chinese industries with overseas parents. The Kunshan region in China has attracted both traditional and emerging industries that have contributed to unparalleled economic growth in the region. This is a significantly large region with a population of 1.65 million with a regional GDP of USD 32 billion (2010). In this study, we use survey data from companies in this thriving region to compare R&D and innovation practices of the firms in the traditional and emerging industries in this region. We do not know enough about the innovation practices of emerging industrial firms in China, who may have a profound influence on the industrial China of the future much like South Korean firms such as KIA, Hyundai, Samsung, etc. The findings of this exploratory study based on data collected from the Kunshan region enables us to recommend avenues for future research.     

Learning through foreign market participation: the relative benefits of exporting,importing, and foreign direct investment

A growing literature explores the degree to which firms learn from exporting. Although this literature finds that firms that export subsequently enjoy enhanced innovative performance, there has been little research that compares the effect of exporting to that of alternative internationalization activities. In this paper, we extend the literature to explore theoretically the differential effects of a firm’s exporting, foreign direct investment, and importing activity on its innovative outcomes. We test the resulting hypotheses using a sample of Spanish manufacturing firms from 2000 to 2008. We find that (1) learning associated with exporting is more pronounced than that associated with a firm’s FDI activities, (2) exporting and FDI operate as substitutes in their effect on a firm’s learning, and (3) although importing is positively associated with learning as manifested in new product introductions, it is not associated with learning as manifested in patenting activity.     

MARKET ANALYSIS IN THE PRESENCE OF INDIRECT CONSTRAINTS AND CAPTIVE SALES

In antitrust cases as well as for regulated industries, thequestion of how to treat indirect constraint and captive salescorrectly has become of major importance in Europe. The (im-)propertreatment of indirect constraints has lead the CFI to overturnthe Commission's decision in the proposed merger of Schneiderand Legrand. Moreover, with regards to the definition of wholesalebroadband access markets, there is an ongoing controversy betweenthe Commission and some National Regulatory Authorities, centeringon the question of whether to incorporate indirect constraintsalready at the stage of market definition. To inform this debate,we present in this article some of the insights from a detailedformal analysis into markets with indirect constraints and captivesales. We show how indirect constraints are appropriately takeninto account through the elasticity of derived demand and commentalso on the informativeness of concentration measures on boththe wholesale and retail market. We further derive insightsinto when indirect constraints may be more or less importantcompared with direct constraints. Finally, we also discuss themore practical difficulties that are encountered when analyzing(or estimating) market structures where forward integrated firmsalso sell to other, competing retail firms.     

Privatization, Competition, and Budget Constraints: Disciplining Enterprises in Russia

We investigate whether privatization, competitive forces, and the hardening of budget constraints played efficiency-enhancing roles in Russia in the immediate post-privatization period. We find evidence of a positive impact of privatization on labor productivity: a 10% point increase in private share ownership raises real sales per employee by 3–5%. The evidence on product market competition is weaker, depending on model specification. Soft budget constraints are usually found to reduce restructuring but the effect is small and insignificant. We find that in terms of their impacts on productivity, privatization and subsidy reduction are substitutes; privatization and competition (measured as the geographic scope of markets) are complements; and that competition and subsidy reduction are independent.     

Is Canadian intellectual property leaving Canada? A study of nanotechnology patenting

In this study we explore the patent ownership for the innovations created by Canadian nanotechnology inventors. We find that although there is a great innovative potential and inventive productivity among Canadian researchers, a lot of the intellectual property actually leaves the country: Around 50% of the nanotechnology patents invented by Canadian inventors are owned by foreign assignees. We also note the predominance of private companies among the patent owners. Almost one-third of all the Canadian-invented nanotechnology patents is assigned to a single American firm, Xerox Corporation. Furthermore, we explore the role of Canadian nanotechnology star inventors. The results show that the fruits of their great inventive productivity are collected outside Canada.