Do innovation and human capital explain the productivity gap between small and large firms?
AbstractEmpirical evidence is compelling that large firms are more productive than small firms. The hypothesis in this paper is that the productivity differences between small and large firms are associated with two of the main determinants of a firm’s performance: the human and technological capital that firms incorporate. We suggest that the contribution of these factors in explaining the size of the productivity gap might not only be due to the fact that large firms make a more extensive use of them, but also because large firms obtain higher returns from their investment in human and technological capital. The evidence we obtain for a comprehensive sample of Spanish manufacturing firms (1990-2002) supports this hypothesis, which has important implications for the effectiveness of policies designed to improve productivity in SMEs by stimulating innovation and the use of more skilled workers.
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Bibliographic InfoPaper provided by University of Barcelona, Research Institute of Applied Economics in its series IREA Working Papers with number 200716.
Length: 25 pages
Date of creation: Nov 2007
Date of revision: Nov 2007
total factor productivity; innovation; skilled labour; firm size.;
Find related papers by JEL classification:
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-12-08 (All new papers)
- NEP-BEC-2007-12-08 (Business Economics)
- NEP-EFF-2007-12-08 (Efficiency & Productivity)
- NEP-ENT-2007-12-08 (Entrepreneurship)
- NEP-HRM-2007-12-08 (Human Capital & Human Resource Management)
- NEP-TID-2007-12-08 (Technology & Industrial Dynamics)
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