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Firm dynamics and productivity growth: a comparison of the retail trade and manufacturing sectors

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  • John R. Baldwin
  • Wulong Gu

Abstract

This article examines how the reallocation of market shares differs in the retail trade and manufacturing sectors and what it reveals about the nature of competition in the two sectors. It compares and contrasts the amount and type of firm dynamics and examines its contribution to aggregate productivity growth in those two sectors. The potential competitive pressures acting on these two very different industries were very similar in that about the same proportion of firms entered and exited both industries. The survival processes associated with exit were similar. There were similar differences in productivity between entrants and the exits that they drove out. While the potential for turnover was the same, its realization was not. Retail entrants bought a different option when they experimented with entry that suggests different entry costs. They started at a larger relative size upon entry. The differences that occurred in relative entry size gave retail entrants a greater proportional share of output and inputs and led the turnover process to make a greater contribution to aggregate productivity growth. Copyright 2011 The Author 2011. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.

Suggested Citation

  • John R. Baldwin & Wulong Gu, 2011. "Firm dynamics and productivity growth: a comparison of the retail trade and manufacturing sectors," Industrial and Corporate Change, Oxford University Press, vol. 20(2), pages 367-395, April.
  • Handle: RePEc:oup:indcch:v:20:y:2011:i:2:p:367-395
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    File URL: http://hdl.handle.net/10.1093/icc/dtq064
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    Cited by:

    1. John R. Baldwin & Wulong Gu & Beiling Yan, 2013. "Export Growth, Capacity Utilization, and Productivity Growth: Evidence from the Canadian Manufacturing Plants," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 59(4), pages 665-688, December.
    2. Someshwar Rao, 2011. "Insights from Latin America for Canada: A Review Article on The Age of Productivity: Transforming Economies from the Bottom Up," International Productivity Monitor, Centre for the Study of Living Standards, vol. 21, pages 70-81, Spring.
    3. Ilke Van Beveren & Stijn Vanormelingen, 2014. "Human capital, firm capabilities and productivity growth," Working Paper Research 257, National Bank of Belgium.
    4. Giovanni Dosi & Emanuele Pugliese & Pietro Santoleri, 2017. "Growth and survival of the `fitter'? Evidence from US new-born firms," LEM Papers Series 2017/06, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    5. Marco Vivarelli, 2012. "Entrepreneurship and Post-Entry Performance: the Microeconomic Evidence," DISCE - Quaderni del Dipartimento di Scienze Economiche e Sociali dises1286, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    6. Hyytinen, Ari & Maliranta, Mika, 2013. "Firm lifecycles and evolution of industry productivity," Research Policy, Elsevier, vol. 42(5), pages 1080-1098.
    7. Marco Vivarelli, 2013. "Is entrepreneurship necessarily good? Microeconomic evidence from developed and developing countries," Industrial and Corporate Change, Oxford University Press, vol. 22(6), pages 1453-1495, December.
    8. Hyytinen, Ari & Maliranta, Mika, 2011. "Firm Lifecycles and External Restructuring," Discussion Papers 1253, The Research Institute of the Finnish Economy.
    9. Vivarelli, Marco, 2012. "Drivers of entrepreneurship and post-entry performance : microeconomic evidence from advanced and developing countries," Policy Research Working Paper Series 6245, The World Bank.

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