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Living on the edge: An anatomy of New Zealand’s most productive firms

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  • Richard Fabling

    (Independent Researcher)

Abstract

Theory and international evidence suggest that firms at the New Zealand productivity frontier may be especially important for the diffusion of knowledge from the global productivity frontier, acting as a conduit for new technologies and ideas to flow into the domestic economy. We identify the NZ productivity frontier in a novel way that is robust to some sources of measurement error, and to criticism that the frontier label is dependent on arbitrary assumptions. We show that economic activity is concentrated in the upper deciles of the productivity distribution, and that frontier firms are disproportionately important to aggregate output, even relative to firms just outside the frontier. Compared to laggard firms, frontier firms: employ a more skilled workforce concentrated in major Urban Areas (particularly Auckland); have superior human resource management practices; are more export intensive; are more likely to have up-to-date technology (including UFB use); and to be in markets with no competitors.

Suggested Citation

  • Richard Fabling, 2021. "Living on the edge: An anatomy of New Zealand’s most productive firms," Working Papers 21_01, Motu Economic and Public Policy Research.
  • Handle: RePEc:mtu:wpaper:21_01
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    File URL: https://motu-www.motu.org.nz/wpapers/21_01.pdf
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    References listed on IDEAS

    as
    1. Chad Syverson, 2011. "What Determines Productivity?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 326-365, June.
    2. Rachel Griffith & Stephen Redding & Helen Simpson, 2009. "Technological Catch‐Up And Geographic Proximity," Journal of Regional Science, Wiley Blackwell, vol. 49(4), pages 689-720, October.
    3. David Card & Ana Rute Cardoso & Joerg Heining & Patrick Kline, 2018. "Firms and Labor Market Inequality: Evidence and Some Theory," Journal of Labor Economics, University of Chicago Press, vol. 36(S1), pages 13-70.
    4. Dan Andrews & Chiara Criscuolo & Peter N. Gal, 2015. "Frontier Firms, Technology Diffusion and Public Policy: Micro Evidence from OECD Countries," OECD Productivity Working Papers 2, OECD Publishing.
    5. Richard Fabling & Arthur Grimes, 2014. "The “Suite†Smell of Success," ILR Review, Cornell University, ILR School, vol. 67(4), pages 1095-1126, October.
    6. Richard Fabling & David C Maré, 2015. "Production function estimation using New Zealand’s Longitudinal Business Database," Working Papers 15_15, Motu Economic and Public Policy Research.
    7. Richard Fabling & Lynda Sanderson, 2014. "Productivity distributions in New Zealand: The dangers of international comparison," Working Papers 14_16, Motu Economic and Public Policy Research.
    8. Fabling, Richard & Grimes, Arthur, 2021. "Picking up speed: Does ultrafast broadband increase firm productivity?," Information Economics and Policy, Elsevier, vol. 57(C).
    9. Richard Fabling & Lynda Sanderson, 2016. "A Rough Guide to New Zealand's Longitudinal Business Database (2nd edition)," Working Papers 16_03, Motu Economic and Public Policy Research.
    10. Fabling, Richard & Sanderson, Lynda, 2013. "Exporting and firm performance: Market entry, investment and expansion," Journal of International Economics, Elsevier, vol. 89(2), pages 422-431.
    11. David C. Maré & Dean R. Hyslop & Richard Fabling, 2017. "Firm productivity growth and skill," New Zealand Economic Papers, Taylor & Francis Journals, vol. 51(3), pages 302-326, September.
    12. Richard Fabling & David C. Maré, 2019. "Improved productivity measurement in New Zealand's Longitudinal Business Database," Working Papers 19_03, Motu Economic and Public Policy Research.
    13. Richard Fabling & David C Maré, 2015. "Addressing the absence of hours information in linked employer-employee data," Working Papers 15_17, Motu Economic and Public Policy Research.
    14. David C. Maré & Richard Fabling, 2019. "Competition and productivity: Do commonly used metrics suggest a relationship?," Working Papers 19_16, Motu Economic and Public Policy Research.
    15. Nathan Chappell & Adam Jaffe, 2018. "Intangible Investment and Firm Performance," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 52(4), pages 509-559, June.
    16. Richard Fabling, 2011. "Keeping it Together: Tracking Firms on New Zealand’s Longitudinal Business Database," Working Papers 11_01, Motu Economic and Public Policy Research.
    17. Richard Fabling & Lynda Sanderson, 2014. "Foreign acquisition and the performance of New Zealand firms," New Zealand Economic Papers, Taylor & Francis Journals, vol. 48(1), pages 1-20, April.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Multifactor productivity; productivity frontier; productivity growth; management practices; innovation; exporting; foreign direct investment; competition;
    All these keywords.

    JEL classification:

    • D20 - Microeconomics - - Production and Organizations - - - General
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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