Heavyweights - The Impact of Large Businesses on Productivity Growth

33 Pages Posted: 5 Nov 2007

See all articles by Oliver Falck

Oliver Falck

CESifo (Center for Economic Studies and Ifo Institute) - Department Human Capital and Innovation

Date Written: October 2007

Abstract

The idea of an industrial policy that promotes large businesses - heavyweights - as the best way to compete in a globalized world has become, again, en vogue among European politicians. The only apparent controversy about the idea revolves around whether it is better to promote national champions or, instead, European champions. Empirical evidence on the issue is rare and contradictory. A uniquely rich industry-level dataset for Germany is used in this paper to test whether large business size in an industry fosters growth in terms of total factor productivity (TFP). The results suggest that the overall effects of firm size on TFP growth are negative.

Keywords: firm size, productivity growth, total factor productivity, innovation

JEL Classification: L11, L16, O33, O40

Suggested Citation

Falck, Oliver, Heavyweights - The Impact of Large Businesses on Productivity Growth (October 2007). CESifo Working Paper No. 2135, Available at SSRN: https://ssrn.com/abstract=1027577 or http://dx.doi.org/10.2139/ssrn.1027577

Oliver Falck (Contact Author)

CESifo (Center for Economic Studies and Ifo Institute) - Department Human Capital and Innovation ( email )

Poschingerstr. 5
Munich, 81679
Germany

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