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Productivity dynamics in the retail trade sector: the roles of large modern retailers and small entrants

Author

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  • Janghee Cho

    (Jeju National University)

  • Hyunbae Chun

    (Sogang University)

  • Yoonsoo Lee

    (Sogang University)

Abstract

The massive reallocation and restructuring triggered by the growth of large modern retailers (LMRs) have improved retail productivity worldwide. Using establishment-level census data, we examine the roles of LMRs and small stores in reallocation and productivity growth in the Korean retail trade sector. We find that retail sector productivity growth is accounted for mostly by the entry of small, productive stores. These small stores are more likely to enter counties with LMRs. Moreover, we find that the entrants in LMR counties are more productive than those elsewhere. Our finding of a complementary relationship between small and large stores contrasts with the evidence from developed countries, where retail productivity growth is explained predominantly by more productive, large entrants such as Wal-Mart displacing less productive incumbents.

Suggested Citation

  • Janghee Cho & Hyunbae Chun & Yoonsoo Lee, 2023. "Productivity dynamics in the retail trade sector: the roles of large modern retailers and small entrants," Small Business Economics, Springer, vol. 60(1), pages 291-313, January.
  • Handle: RePEc:kap:sbusec:v:60:y:2023:i:1:d:10.1007_s11187-022-00632-7
    DOI: 10.1007/s11187-022-00632-7
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    More about this item

    Keywords

    Entry and Exit; Large Modern Retailer; Market Selection; Productivity; Small Stores;
    All these keywords.

    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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