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Productivity Divergence – Frontier Firms vs. the Others

Author

Listed:
  • Pajarinen, Mika
  • Rouvinen, Petri
  • Ylhäinen, Ilkka

Abstract

International literature suggests that productivity growth of the global frontier firms – those in the best five percent – has diverged from the others during the 2000s. We study this issue using Finnish firm-level data. We find that the productivity of the Finnish frontier firms does not diverge from the others to such a degree as in the international comparisons. The findings do not provide clear evidence of a slowdown in the diffusion process. We also analyze whether frontier firms are associated with characteristics related to digitalization – and do not find clear evidence of that either. This might be related to the fact that the employed measures are related to technology adoption – not to the creativity or efficiency of its use.

Suggested Citation

  • Pajarinen, Mika & Rouvinen, Petri & Ylhäinen, Ilkka, 2017. "Productivity Divergence – Frontier Firms vs. the Others," ETLA Reports 77, The Research Institute of the Finnish Economy.
    • Handle: RePEc:rif:report:77
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    More about this item

    Keywords

    Productivity; Divergence; Diffusion; Ddigitalization; Finland;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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