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Why is Productivity so Dispersed?

Author

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  • Rachel Griffith
  • Jonathan Haskel
  • Andy Neely

Abstract

Many papers have documented wide variations in productivity even in narrowly defined industries. Some have argued that this primarily reflects measurement problems due, for example, to comparing across different products. Others argue that this reflects persistent differences in performance due, for example, to management. This paper looks at productivity differences not within an industry but within a firm. We use data on productivity of different branches within lines of business of a major UK-based wholesaler. Using these productivity data for comparisons is, we argue, more likely to compare like with like than comparing between firms. We document sustained differences in productivity even between branches within the same line of business. We also discuss the extent to which they are correlated with differences in management and find that such differences 'account' for around 40 per cent of the difference in productivity. Copyright 2006, Oxford University Press.

Suggested Citation

  • Rachel Griffith & Jonathan Haskel & Andy Neely, 2006. "Why is Productivity so Dispersed?," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 22(4), pages 513-525, Winter.
    • Handle: RePEc:oup:oxford:v:22:y:2006:i:4:p:513-525
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    Cited by:

    1. Nick Zubanov & W.S. Siebert, 2009. "Management economics in a large UK retailer," CPB Discussion Paper 125, CPB Netherlands Bureau for Economic Policy Analysis.
    2. Moro, Alessio & Stucchi, Rodolfo, 2015. "Heterogeneous productivity shocks, elasticity of substitution and aggregate fluctuations," Journal of Macroeconomics, Elsevier, vol. 45(C), pages 45-53.
    3. Arturs Kalnins & Stephen F. Lin & Catherine Thomas, 2018. "In-house and arms length: productivity heterogeneity and variation in organizational form," CEP Discussion Papers dp1579, Centre for Economic Performance, LSE.
    4. Thomas Triebs & Subal C. Kumbhakar, 2012. "Management Practice in Production," ifo Working Paper Series 129, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    5. Paul-Antoine Chevalier & Rémy Lecat & Nicholas Oulton, 2009. "Convergence of Firm-Level Productivity, Globalisation, Information Technology and Competition: Evidence from France," CEP Discussion Papers dp0916, Centre for Economic Performance, LSE.
    6. W. Stanley Siebert & Nikolay Zubanov, 2010. "Management Economics in a Large Retail Company," Management Science, INFORMS, vol. 56(8), pages 1398-1414, August.
    7. Cortes, Guido Matias & Salvatori, Andrea, 2019. "Delving into the demand side: Changes in workplace specialization and job polarization," Labour Economics, Elsevier, vol. 57(C), pages 164-176.
    8. Shutao Cao, 2008. "A Model of Costly Capital Reallocation and Aggregate Productivity," Staff Working Papers 08-38, Bank of Canada.
    9. Kauhanen, Antti & Roponen, Satu, 2010. "Productivity dispersion: A case study," Research in Economics, Elsevier, vol. 64(2), pages 97-100, June.
    10. Siebert, W. Stanley & Zubanov, Nick, 2008. "Management Economics in a Large Retail Organization," IZA Discussion Papers 3645, Institute of Labor Economics (IZA).

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