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Characterizing the Production Process: A Disaggregated Analysis of Italian Manufacturing Firms

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  • Giulio Bottazzi
  • Marco Grazzi
  • Angelo Secchi

Abstract

This paper provides a description of the production process by comparing different frameworks in which to analyze the relations between inputs and output. The analysis is performed on a representative sample of Italian manufacturing firms. We employ both parametric and non-parametric analysis. The last allows to detect presence of heterogeneity in the way the production is carried out within each sector. We review some traditional issues in the econometrics of production function estimation and explain how some of them can be solved exploiting the cross-sectional time-series nature of data. Results of the econometric analysis show that coefficients estimates tend to be robust with respect to different models employed. Analysis of levels of labor productivity confirms presence of significant intra-sector heterogeneity which persists over time.

Suggested Citation

  • Giulio Bottazzi & Marco Grazzi & Angelo Secchi, 2004. "Characterizing the Production Process: A Disaggregated Analysis of Italian Manufacturing Firms," LEM Papers Series 2004/24, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    • Handle: RePEc:ssa:lemwps:2004/24
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    References listed on IDEAS

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    1. Zvi Griliches & Jacques Mairesse, 1995. "Production Functions: The Search for Identification," NBER Working Papers 5067, National Bureau of Economic Research, Inc.
    2. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    3. Eric J. Bartelsman & John Haltiwanger & Stefano Scarpetta, 2004. "Microeconomic Evidence of Creative Destruction in Industrial and Developing Countries," Tinbergen Institute Discussion Papers 04-114/3, Tinbergen Institute.
    4. Yair Mundlak, 1961. "Empirical Production Function Free of Management Bias," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 43(1), pages 44-56.
    5. Giulio Bottazzi & Angelo Secchi, 2006. "Explaining the distribution of firm growth rates," RAND Journal of Economics, RAND Corporation, vol. 37(2), pages 235-256, June.
    6. Zvi Griliches, 1996. "The Discovery of the Residual: A Historical Note," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1324-1330, September.
    7. Giulio Bottazzi & Elena Cefis & Giovanni Dosi, 2002. "Corporate growth and industrial structures: some evidence from the Italian manufacturing industry," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 11(4), pages 705-723, August.
    8. Pagan,Adrian & Ullah,Aman, 1999. "Nonparametric Econometrics," Cambridge Books, Cambridge University Press, number 9780521355643.
    9. Mark Doms & Eric J. Bartelsman, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 569-594, September.
    10. Sidney G. Winter, 2002. "Toward an Evolutionary Theory of Production," LEM Papers Series 2002/27, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    11. Varian, Hal R, 1984. "The Nonparametric Approach to Production Analysis," Econometrica, Econometric Society, vol. 52(3), pages 579-597, May.
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    Cited by:

    1. Giulio Bottazzi & Giovanni Dosi & Nadia Jacoby & Angelo Secchi & Federico Tamagni, 2010. "Corporate performances and market selection: some comparative evidence," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 19(6), pages 1953-1996, December.
    2. Bottazzi, Giulio & Grazzi, Marco & Secchi, Angelo, 2005. "Input output scaling relations in Italian manufacturing firms," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 355(1), pages 95-102.
    3. Grazzi, Marco & Sanzo, Roberto & Secchi, Angelo & Zeli, Alessandro, 2013. "The building process of a new integrated system of business micro-data 1989–2004," Journal of Economic and Social Measurement, IOS Press, issue 4, pages 291-324.
    4. Marco Grazzi, 2009. "Trade and Profitability: Is there an export premium? Evidence from Italian manufacturing firms," LEM Papers Series 2009/16, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    5. Giulio Bottazzi & Marco Grazzi, 2014. "Dynamics Of Productivity And Cost Of Labour In Italian Manufacturing Firms," Bulletin of Economic Research, Wiley Blackwell, vol. 66(S1), pages 55-73, December.
    6. Marco Grazzi, 2012. "Export and Firm Performance: Evidence on Productivity and Profitability of Italian Companies," Journal of Industry, Competition and Trade, Springer, vol. 12(4), pages 413-444, December.
    7. Giulio Bottazzi & Angelo Secchi & Federico Tamagni, 2008. "Productivity, profitability and financial performance," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 17(4), pages 711-751, August.
    8. Crosato, Lisa & Destefanis, Sergio & Ganugi, Piero, 2007. "Technology and Firm Size Distribution:Evidence from Italian Manufacturing," CELPE Discussion Papers 102, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.
    9. Giovanni Dosi & Marco Grazzi, 2006. "Technologies as problem-solving procedures and technologies as input--output relations: some perspectives on the theory of production," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 15(1), pages 173-202, February.

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    More about this item

    Keywords

    Input and output relation; Panel data; Returns to scale .;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

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