2013/15 | LEM Working Paper Series | ||||||||||||||||
Productivity, market selection and corporate growth: comparative evidence across US and Europe | |||||||||||||||||
Giovanni Dosi, Daniele Moschella, Emanuele Pugliese, Federico Tamagni |
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Keywords | |||||||||||||||||
firm heterogeneity, productivity decomposition, corporate growth,
market selection, learning, firm-industry dynamics
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JEL Classifications | |||||||||||||||||
C23, D22, L10, L20, O47
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Abstract | |||||||||||||||||
This paper analyzes the patterns of market selection in manufacturing
industries of France, Germany, UK, and USA. We first disentangle the
contribution to industry-level productivity growth of within-firm
productivity changes and between-firms reallocation of shares. The
evidence corroborates the notion that within-firm learning prevails
over market selection forces, with larger firms driving such
innovation and learning processes. Second, we address the
``strength'' of selection by exploring to what extent firm growth
rates are shaped by relative productivity levels as compared to
variation thereof. Our key finding is that, although changes in
relative efficiency have a greater impact on growth than relative
efficiency levels, there is an overall weak relationship between
productivity and growth, and therefore a weak power of selection
forces in all countries. The results hold across firms of different
size, but we also find that selection bites more on SMEs.
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