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on Efficiency and Productivity |
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Issue of 2009‒02‒28
fifteen papers chosen by |
| By: | Bartelsman, Eric J; Haskel, Jonathan; Martin, Ralf |
| Abstract: | An extensive literature on the convergence of productivity between countries examines whether productivity is pulled towards the global frontier country, perhaps due to learning and knowledge spillovers. More recently, studies within countries use the wide dispersion of productivity across firms to explore convergence to the national frontier. Given this within-country dispersion however between country-dispersion is hard to interpret, for it is quite possible that the best firms in a laggard average country are above at least some firms in a leading average country. This paper therefore uses micro data sets across many countries to build better measures of global and national frontiers and firms’ distance from them. Using UK data, we then find that (a) the national frontier exerts a stronger pull on domestic firms than does the global frontier and (b) the pull from the global frontier falls with technological distance, while the pull from the national frontier does not. This result suggests that firms might lag so far technologically that they cannot learn from the global frontier, while they still are able to benefit from domestic knowledge. |
| Keywords: | convergence; distance to frontier; productivity; spillovers |
| JEL: | J24 O47 O57 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7032&r=eff |
| By: | Hirukawa, Masayuki; Ueda, Masako |
| Abstract: | For the sample period of 1965-1992, Kortum and Lerner (2000) find that venture capital (VC) investments have a positive impact on patent count at industry level, and this impact is larger than that of R&D expenditures. We confirm that this positive impact continued to be present and became even stronger in late 90s during which VC industry experienced an unprecedented growth. We then proceed to study if this positive impact of VC is also present on productivity growth, which is a measure of innovation alternative to patent count. Unlike the impact on patent count, we do not find that VC investment affects total factor productivity growth. We do find that VC investment is positively associated with labor productivity but this positive impact is originated from the technology substitution from labor to other productive inputs such as energy and material. Therefore, our finding suggests that, at industry level, VC investment increases the patent propensity but may not necessarily improve the productive efficiency. Various interpretations are offered why this may be the case. |
| Keywords: | Factor Substitution; Innovation; Patent; Productivity; Venture Capital |
| JEL: | D24 G24 O31 O32 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7089&r=eff |
| By: | Aldieri, Luigi; Cincera, Michele |
| Abstract: | This paper aims at assessing the magnitude of R&D spillover effects on large international R&D companies’ productivity growth. In particular, we investigate the extent to which R&D spillover effects are intensified by both geographic and technological proximities between spillover generating and receiving firms. We also control for the firm’s ability to identify, assimilate and absorb the external knowledge stock. The results estimated by means of panel data econometric methods (system GMM) indicate a positive and significant impact of both types of R&D spillovers and of absorptive capacity on productivity performance. |
| Keywords: | absorptive capacity; firms’ productivity growth; Geographic and technological R&D spillovers |
| JEL: | O33 O47 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7113&r=eff |
| By: | Haskel, Jonathan; Sadun, Raffaella |
| Abstract: | We use UK micro data to explore whether planning regulation reduced UK retailing productivity growth between 1997 and 2003. We document a shift to smaller shops, particularly within supermarket chains, following a regulatory change in 1996 which increased the costs of opening large stores. This might have caused a slowdown in productivity growth if firms (a) lose scale advantages, by moving to smaller stores and (b) lose scope advantages if existing organisational knowledge appropriate to larger stores is not perfectly substitutable with the organisational capital required to run smaller stores. Our micro data shows a relation, controlling for fixed effects, between chain-level TFP for multi-store chains and various measures of the size of the stores within the chain. Our results suggest the fall in within-chain shop sizes was associated with a lowering of chain TFP by about 0.4% pa, about 40% of the post-1995 slowdown in UK retail TFP growth. The foregone productivity works out at about £80,000 per small chain supermarket store. |
| Keywords: | Productivity; Regulation.; Retail |
| JEL: | D24 L81 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7140&r=eff |
| By: | Kugler, Maurice; Verhoogen, Eric A. |
| Abstract: | This paper presents a tractable formalization and an empirical investigation of the quality-complementarity hypothesis, the hypothesis that input quality and plant productivity are complementary in generating output quality. We embed this complementarity in a general-equilibrium trade model with heterogeneous, monopolistically competitive firms, extending Melitz (2003), and show that it generates distinctive implications for two simple, observable within-sector correlations -- between output prices and plant size and between input prices and plant size -- and for how those correlations vary across sectors. Using uniquely rich and representative data on the unit values of outputs and inputs of Colombian manufacturing plants, we then document three facts: (1) output prices are positively correlated with plant size within industries on average; (2) input prices are positively correlated with plant size within industries on average; and (3) both correlations are more positive in industries with more scope for quality differentiation, as measured by the advertising and R&D intensity of U.S. industries. The predicted and observed correlations between export status and input and output prices are similar to those for plant size. We present additional evidence that market power of either final-good producers or input suppliers does not fully explain the empirical patterns we observe. These findings are consistent with the predictions of our model and difficult to reconcile with alternative models that impose symmetry or homogeneity of either inputs or outputs. We interpret the results as broadly supportive of the quality-complementarity hypothesis. |
| Keywords: | heterogeneous firms; international trade; plant size; product quality |
| JEL: | F1 L1 O1 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7119&r=eff |
| By: | Clayton, Tony; Dal Borgo, Mariela; Haskel, Jonathan |
| Abstract: | We (a) propose an implementable innovation index, (b) relate it to existing innovation definitions and (c) show whole-economy and industry-specific results for the UK market sector, 2000-2005. Our innovation measure starts by observing that we could get more GDP without innovation by simply duplicating existing physical capital and labour (e.g. adding a second aircraft and crew on an existing route). Thus we propose to measure innovation as the additional GDP over and above the addition existing physical capital and labour. In our measure this is the contribution to GDP growth of market sector investment in knowledge (or intangible) capital. This contribution is measured from company spending on knowledge/intangible assets and TFP growth. We relate our measure to the literature on innovation definitions, TFP, creative industries and hidden innovation. We implement it for six UK market sector industries, 2000-2005, combining with output and tangible investment data from the EUKLEMS database. Our main findings are as follows. Over 2000-2005, market sector labour productivity grew at 2.74% per annum, of which the contribution of knowledge capital, our innovation measure, was 1.24% pa. In turn, manufacturing accounted for about 60% of this latter figure. If one includes increase in labour skill deepening (0.45% pa) as innovation, then innovation contributed 61% (=(1.24+0.45)/2.74)of labour productivity growth over the period. |
| Keywords: | innovation; productivity growth |
| JEL: | E01 E22 O47 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7158&r=eff |
| By: | Clayton, Tony (Office of National Statistics); Dal Borgo, Mariela (University of Warwick); Haskel, Jonathan (Imperial College London) |
| Abstract: | We (a) propose an implementable innovation index, (b) relate it to existing innovation definitions and (c) show whole-economy and industry-specific results for the UK market sector, 2000-2005. Our innovation measure starts by observing that we could get more GDP without innovation by simply duplicating existing physical capital and labour (e.g. adding a second aircraft and crew on an existing route). Thus we propose to measure innovation as the additional GDP over and above the addition existing physical capital and labour. In our measure this is the contribution to GDP growth of market sector investment in knowledge (or intangible) capital. This contribution is measured from company spending on knowledge/intangible assets and TFP growth. We relate our measure to the literature on innovation definitions, TFP, creative industries and hidden innovation. We implement it for six UK market sector industries, 2000-2005, combining with output and tangible investment data from the EUKLEMS database. Our main findings are as follows. Over 2000-2005, market sector labour productivity grew at 2.74% per annum, of which the contribution of knowledge capital, our innovation measure, was 1.24% pa. In turn, manufacturing accounted for about 60% of this latter figure. If one includes increase in labour skill deepening (0.45% pa) as innovation, then innovation contributed 61% (=(1.24+0.45)/2.74)of labour productivity growth over the period. |
| Keywords: | innovation, productivity growth |
| JEL: | O47 E22 E01 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4021&r=eff |
| By: | Barba Navaretti, Giorgio; Faini, Riccardo; Tucci, Alessandra |
| Abstract: | This paper examines whether the export decision of firms is affected by their ownership structure, specifically it looks at whether family control is an obstacle to entering foreign markets. The underlying assumption is that family firms are risk averse. Risk aversion may be an obstacle to entering foreign markets, as far as these are perceived as more volatile and risky than the domestic one, particularly when such choice entices bearing relatively high sunk costs. We develop an illustrative theoretical model that shows how the combination between high risk aversion and low initial productivity may hinder family firms’ decision to enter foreign markets, particularly distant ones. The empirical analysis, based on a detailed panel data set of Italian firms covering the years from 1995 to 2003, confirms such predictions by showing that family controlled firms do indeed export less than other type of companies even after controlling for firm heterogeneity in productivity, size, technology and access to credit. |
| Keywords: | exports; family firms; firm structure; foreign markets |
| JEL: | F1 F14 L2 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7082&r=eff |
| By: | Randall S. Jones |
| Abstract: | Labour productivity growth in the service sector has been low relative to manufacturing. This is explained in part by weak competition in services resulting from strict product market regulation and the low level of import penetration and inflows of foreign direct investment (FDI). Increasing productivity growth in the service sector, which accounts for 67% of employment and 58% of value added in Korea, is essential to sustain high potential growth. The priority is to strengthen competition by eliminating domestic entry barriers, accelerating regulatory reform, upgrading competition policy and reducing barriers to trade and inflows of FDI. Another challenge is to enhance the performance and accelerate the restructuring of small and medium-sized enterprises, which account for over 90% of service-sector employment. Furthermore, it is essential to boost productivity in service industries with high growth potential, such as telecommunications and financial and business.<P>Rehausser la productivité dans le secteur des services en Corée<BR>La croissance de la productivité du travail dans le secteur des services a été lente par rapport à celle du secteur manufacturier. Cela s’explique en partie par la faiblesse de la concurrence dans les services, due à une réglementation stricte des marchés de produits et à un niveau peu élevé de pénétration des importations et d’entrées d’investissement direct étranger (IDE). Un renforcement des gains de productivité dans le secteur des services, qui représente 67 % de l’emploi et 58 % de la valeur ajoutée en Corée, est essentiel pour soutenir un taux élevé de croissance potentielle. Il faut en priorité intensifier la concurrence en supprimant les barrières intérieures à l’entrée, en accélérant la réforme de la réglementation, en améliorant la politique de la concurrence et en réduisant les obstacles au commerce et à l’afflux d’IDE. Une autre tâche difficile sera de rehausser les résultats et d’accélérer la restructuration des petites et moyennes entreprises, qui représentent plus de 90 % de l’emploi dans le secteur des services. Il est par ailleurs indispensable de stimuler la productivité dans les domaines qui ont un fort potentiel de croissance, comme les télécommunications et les services financiers et aux entreprises. |
| Keywords: | telecommunications, télécommunications, competition policy, réforme de la réglementation, politique de la concurrence, Korea, Corée, croissance de la productivité, regulatory reforms, foreign direct investment, investissement direct étranger, productivity and growth, legal services, service sector, services trade, Small and Medium-sized Enterprises, Business service, petites et moyennes entreprises, secteur des services, commerce de service, service aux entreprises, financial services, FTAs, KFTC, KFTC, services légaux, services financiers |
| JEL: | R11 R21 R31 |
| Date: | 2009–02–20 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:673-en&r=eff |
| By: | Hirukawa, Masayuki; Ueda, Masako |
| Abstract: | Policy makers typically interpret positive relations between venture capital investments and innovations as an evidence that venture capital investments stimulate innovation ('VC-first hypothesis'). This interpretation is, however, one-sided because there may be a reverse causality that innovations induce venture capital investments ('innovation-first hypothesis'): an arrival of new technology increases demands for venture capital by driving new firm startups. We analyze this causality issue of venture capital investments and innovation in the US manufacturing industry using both total factor productivity (TFP) growth and patent counts as measures of innovation. Using a panel AR regression as well as industry-by-industry AR regressions, we find that TFP growth is often positively and significantly related with future VC investment, which is consistent with the innovation-first hypothesis. We find little evidence that supports the VC-first hypothesis. More surprisingly, one-year lagged VC investments are often negatively and significantly related with both TFP growth and patent counts. |
| Keywords: | Innovation; Venture Capital |
| JEL: | D24 G24 O31 O32 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7090&r=eff |
| By: | Pierre Philippe Combes (University of AixMarseille and CEPR); Gilles Duranton (University of Toronto and CEPR); Laurent Gobillon (Institut National d’Etudes Démographiques, PSEINRA, and CREST); Diego Puga (IMDEA, Universidad Carlos III and CEPR); Sébastien Roux (CREST INSEE) |
| Abstract: | Firms are more productive on average in larger cities. Two explanations have been offered: agglomeration economies (larger cities promote interactions that increase productivity) and firm selection (larger cities toughen competition allowing only the most productive to survive). To distinguish between them, we nest a generalised version of a seminal firm selection model and a standard model of agglomeration. Stronger selection in larger cities left-truncates the productivity distribution whereas stronger agglomeration right-shifts and dilates the distribution. We assess the relative importance of agglomeration and firm selection using French establishment-level data and a new quantile approach. Spatial productivity differences in France are mostly explained by agglomeration. |
| Keywords: | agglomeration; firm selection; productivity, cities |
| JEL: | C52 R12 D24 |
| Date: | 2009–02–20 |
| URL: | http://d.repec.org/n?u=RePEc:imd:wpaper:wp2009-02&r=eff |
| By: | Dolado, Juan J.; Stucchi, Rodolfo |
| Abstract: | This paper evaluates the impact of the widespread use of fixed-term contracts in Spain on firms' TFP, via its effect on workers' effort. We propose a simple analytical framework showing that, under plausible conditions, workers' effort depends positively on their perception (for given level of effort) about firms' willingness to convert fixed-term contracts into permanent ones. We test this implication using manufacturing firm level data from 1991 to 2005 by means of nonparametric tests of stochastic dominance and parametric multivariate regression approaches. Our main findings are that high conversion rates increase firm's productivity while high shares of temporary contracts decrease it. Both effects are quantitatively relevant. |
| Keywords: | firms' TFP; temporary workers; workers' effort |
| JEL: | C14 C52 D24 J24 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7055&r=eff |
| By: | Martin, Philippe; Mayer, Thierry; Mayneris, Florian |
| Abstract: | This paper analyzes empirically a public policy promoting industrial clusters in France. Cluster policies have become popular in many countries but have not been extensively evaluated empirically. We use data on production and employment for firms that benefited from the policy and on firms that did not, both before and after the policy started. We first show that the policy selected firms in relative decline. Furthermore, our results suggest that the policy had no major effect on their productivity but may have helped them in terms of employment. |
| Keywords: | clusters; localization economies; public policies |
| JEL: | C23 R10 R11 R12 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7102&r=eff |
| By: | Nicolas Couderc; Laurent Weill (Laboratoire de Recherche en Gestion et Economie, Université de Strasbourg) |
| Abstract: | This paper conducts an analysis of the relationship between CEO compensation and managerial performance on a large panel of US public firms, by taking into account the different components of CEO compensation. We estimate a stochastic frontier model in which managerial performance is related to compensation components. We find a positive and significant influence of CEO compensation on managerial performance, with a differentiated impact for components of compensation. We show that increases in salary, bonus, and options grants tend to enhance managerial performance. Our findings tend therefore to support the view that compensation contracts can be designed to increase managerial performance. |
| Keywords: | Executive compensation, corporate governance, stochastic frontier. |
| JEL: | C30 G30 J33 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:lar:wpaper:2009-03&r=eff |
| By: | Annamaria Conti (Chaire en Economie et Management de l'Innovation, Collège du Management de la Technologie, Ecole Polytechnique Fédérale de Lausanne); Patrick Gaulé (Chaire en Economie et Management de l'Innovation, Collège du Management de la Technologie, Ecole Polytechnique Fédérale de Lausanne) |
| Abstract: | Europe is perceived to lag behind the US in converting its academic results into economic outcomes. Using new survey data and controlling for standard factors affecting the productivity of Technology Transfer Offices (TTOs), we find that European TTOs do not execute less licenses than US TTOs. However, they earn significantly less revenue from licenses. We relate the difference in licensing income to differences in the organization and staffing of TTOs. Specifically, US TTOs employ more staff with experience in industry and appear to have greater flexibility in managing their budget. |
| Keywords: | technology transfer office, technology licensing, European paradox |
| JEL: | L3 O31 O38 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:cmi:wpaper:cemi-workingpaper-2009-003&r=eff |