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Productivity and the international firm: dissecting heterogeneity

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Author Info

  • Davide Castellani

    (University of Perugia)

  • Giorgia Giovannetti

    (University of Florence, European University Institute and Fondazione Manlio MASI-ICE)

Abstract

Firms in competitive markets are more likely achieve higher productivity. Indeed a better performance of multinationals and exporters with respect to domestic firms has been documented in the literature. The sources of these premia have however largely remained a black box: standard theoretical models consider differences in productivity as the results of a random draw. Only recently models have acknowledged that in competitive environments, firms are more likely to adopt new technologies. This theoretical framework reconciles recent empirical work noting that productivity differences among firms can be explained by different managerial practices, I.T. and organizational capital. In this paper, using an original dataset on Italian firms, we show that the higher use of knowledge workers (such as R&D workers, as well as workers in managerial and clerical occupations) explains some of the TFP premium of exporters and multinational firms. Our results suggest that TFP differences are not only the results in different constant in the production function between international and noninternational firms, but they rather reflect differences in the slopes of the production function. In fact, allowing for different returns to inputs between domestic and international firms, we explain all of the productivity premium and beyond. This is the result of the fact that multinational firms are both more capital intensive and exhibit higher returns to capital. Furthermore, we find that managers and capital are complements in the productivity of multinational firms. This is consistent with the idea that multinational firms have superior organizational capabilities and managerial practices.

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Bibliographic Info

Paper provided by Centro Studi Luca d\'Agliano, University of Milano in its series Development Working Papers with number 270.

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Date of creation: 01 Jun 2009
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Handle: RePEc:csl:devewp:270

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Keywords: productivity; tfp; competition; management; mode of internationalization;

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References

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Citations

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Cited by:
  1. Annamaria Nifo & Domenico Scalera, 2011. "Structural Changes in Italian Industry: The Impact of Crisis. A Comment on the Book Edited by Laura Rondi and Francesco Silva," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, Associazione Rossi Doria, issue 2, June.
  2. Giorgia Giovannetti & Giorgio Ricchiuti & Margherita Velucchi, 2013. "Heterogeneity in managerial strategies and internationalization of firms: the case of Italy," ECONOMIA E POLITICA INDUSTRIALE, FrancoAngeli Editore, FrancoAngeli Editore, vol. 2013(2), pages 51-66.
  3. Marcello Pagnini & Valter Di Giacinto & Giacinto Micucci & Matteo Gomellini, 2011. "Mapping Local Productivity Advantages In Italy: Industrial Districts, Cities Or Both?," ERSA conference papers ersa11p1806, European Regional Science Association.
  4. Giulio Cainelli & Eleonora Di Maria & Roberto Ganau, 2011. "Agglomeration, related-variety and internationalisation. Does a relationship exist?," Openloc Working Papers, Public policies and local development 1114, Public policies and local development.
  5. A. Lasagni & A. Nifo & G. Vecchione, 2012. "Firm productivity and institutional quality. Evidence from Italian industry," Economics Department Working Papers 2012-EP07, Department of Economics, Parma University (Italy).
  6. De Masi, G. & Giovannetti, G. & Ricchiuti, G., 2013. "Network analysis to detect common strategies in Italian foreign direct investment," Physica A: Statistical Mechanics and its Applications, Elsevier, Elsevier, vol. 392(5), pages 1202-1214.
  7. Roberto Antonietti & Alberto Marzucchi, 2013. "Green Investment Strategies and Export Performance: A Firm-level Investigation," Working Papers, Fondazione Eni Enrico Mattei 2013.76, Fondazione Eni Enrico Mattei.
  8. Curzi, Daniele & Olper, Alessandro, 2012. "Export behavior of Italian food firms: Does product quality matter?," Food Policy, Elsevier, Elsevier, vol. 37(5), pages 493-503.
  9. Békés, Gábor & Halpern, László & Muraközy, Balázs, 2011. "A teremtő rombolás szerepe a vállalati termelékenység alakulásában Magyarországon
    [The role of creative destruction in the development of corporate productivity in Hungary]
    ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(2), pages 111-132.
  10. Naudé, Wim & Gries, Thomas & Bilkic, Natasa, 2013. "Firm-Level Heterogeneity and the Decision to Export: A Real Option Approach," IZA Discussion Papers 7346, Institute for the Study of Labor (IZA).
  11. Valeria Gattai & Valentina Trovato, 2014. "Estimating sourcing premia with Italian regional data," Working Papers, University of Milano-Bicocca, Department of Economics 276, University of Milano-Bicocca, Department of Economics, revised Jun 2014.
  12. Fulvio Castellacci, 2014. "Service Firms Heterogeneity, International Collaborations and Export Participation," Journal of Industry, Competition and Trade, Springer, Springer, vol. 14(2), pages 259-285, June.
  13. Castellacci, Fulvio, 2010. "Firm heterogeneity, international cooperations and export participation," MPRA Paper 27585, University Library of Munich, Germany.
  14. Péter Harasztosi, 2011. "Growth in Hungary 1994-2008: The role of capital, labour, productivity and reallocation," MNB Working Papers, Magyar Nemzeti Bank (the central bank of Hungary) 2011/12, Magyar Nemzeti Bank (the central bank of Hungary).

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