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Superstar Firms, Productivity And Technological Progress: Evidence From Indonesia’S Manufactoring Sector

Author

Listed:
  • Masagus M. Ridhwan

    (Bank Indonesia)

  • Rizki Nauli Siregar

    (University of Mainz)

  • Jahen F. Rezki

    (University of Indonesia)

Abstract

Countries currently face two big trends, especially in the manufacturing sector: premature deindustrialization and the prevalence of superstar firms. In this paper, we document and characterize firm heterogeneity in a developing economy context, using Indonesia from 2005 to 2015 as context. We show the importance of large firms in shaping aggregate outcomes in the manufacturing sector. Furthermore, we confirm that productivity growth increases domestic market shares and profit by increasing the power to exert mark-up and reducing labor shares. We also show the importance of international trade engagement by superstar firms. We show new insights on superstar firms that do not necessarily have higher mark-up rates than others. The policy implication from this study is efforts to boost superstar firms in Indonesia will be paramount, especially policies to increase firms’ size and promoting exports.

Suggested Citation

  • Masagus M. Ridhwan & Rizki Nauli Siregar & Jahen F. Rezki, 2022. "Superstar Firms, Productivity And Technological Progress: Evidence From Indonesia’S Manufactoring Sector," Working Papers WP/10/2022, Bank Indonesia.
    • Handle: RePEc:idn:wpaper:wp102022
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly

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