Impact of Plant Size and Focus on Productivity: An Empirical Study
Recent popular business literature has suggested that there is a significant trend in the United States for firms to decrease the size and increase the focus of manufacturing plants they operate, and that this leads to higher productivity. This paper tests empirically the validity of these claims. We analyze data on virtually the entire population of manufacturing plants in the United States and find that, contrary to the popular business literature, the average size of plants increased during the period 1972--1984. However, consistent with the popular notion, the rate of growth in plant size slowed considerably, and even turned negative for a category of large plants. Plant focus did increase during this period. We then investigate the relationship between productivity and plant characteristics including plant size and plant focus. Overall, our results do not support the popular argument that reduction in plant size results in productivity gains. However, we do find support for this argument in some two-digit SIC industries; also, scale economies in the entire population decreased over the period 1972--1982. We also find only limited support for the popular argument that plant focus increases productivity.
Volume (Year): 42 (1996)
Issue (Month): 7 (July)
|Contact details of provider:|| Postal: |
Web page: http://www.informs.org/Email:
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:42:y:1996:i:7:p:1065-1081. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.