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The Impact of Firm Size and Market Concentration on Firm Productivity

In: Proceedings of the 19th International Symposium on Management (INSYMA 2022)

Author

Listed:
  • Suyanto Suyanto

    (Universitas Surabaya)

  • Yenny Sugiarti

    (Universitas Surabaya)

  • Cynthia Yohanna Kartikasari

    (Universitas Surabaya)

Abstract

This study investigates the impact of firm size and market concentration on firm productivity in Indonesian manufacturing. Firm size has been enduring interest in studies on firm productivity as the impact can be positive or negative. On the other hand, market concentration has increasingly been a key concern in evaluating firm productivity. This study used firm-level panel data of 6,783 manufacturing firms (47,481 observations) across 33 provinces of Indonesia. Two methods were applied in estimating the data; those methods were adjusted-autocorrelation OLS and random effect GLS. The results show that firm size has a significant positive effect on firm productivity, indicating that a large-scale firm experiences higher productivity than a small size firm. In addition, market concentration appears to have a negative impact on firm productivity, suggesting that a firm in a more concentrated industry tends to be less productive. The implication of this study suggests that a firm produces on a large scale and competes in a less concentrated market.

Suggested Citation

  • Suyanto Suyanto & Yenny Sugiarti & Cynthia Yohanna Kartikasari, 2023. "The Impact of Firm Size and Market Concentration on Firm Productivity," Advances in Economics, Business and Management Research, in: Werner Ria Murhadi & Dudi Anandya & Noviaty Kresna Darmasetiawan & Juliani Dyah Trisnawati & Putu An (ed.), Proceedings of the 19th International Symposium on Management (INSYMA 2022), pages 1186-1192, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-008-4_146
    DOI: 10.2991/978-94-6463-008-4_146
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