Explaining the Size Distribution of Plants: An Approach Based on Civic Capital

Quaderni DSE Working Paper No. 755

40 Pages Posted: 13 Jun 2011

See all articles by Matthias Burker

Matthias Burker

University of Bologna - Department of Economics

G. Alfredo Minerva

University of Bologna - Department of Economics

Date Written: June 1, 2011

Abstract

We show that the distribution of plant size within narrowly defined industries is affected by the variation in the stock of civic capital that occurs at the provincial level. Data on plant size come from the 2001 Italian Census of Manufacturing and Services. Civic capital turns out to have a positive effect on both the average and the standard deviation of the plant size distribution. This effect is stronger in labor-intensive industries. The potential endogeneity of current civic capital is addressed by instrumenting it with historical variables. Our interpretation for these results is that civic capital is associated with reduced opportunistic behavior, which improves intra-firm cooperation and hampers the incidence of principal-agent problems, thus allowing plants to operate on a larger scale

Keywords: agency problems, civic capital, cooperation, opportunism, plant size distribution

JEL Classification: D23, Z13, L20, A13

Suggested Citation

Burker, Matthias and Minerva, Gaetano Alfredo, Explaining the Size Distribution of Plants: An Approach Based on Civic Capital (June 1, 2011). Quaderni DSE Working Paper No. 755, Available at SSRN: https://ssrn.com/abstract=1863870 or http://dx.doi.org/10.2139/ssrn.1863870

Matthias Burker (Contact Author)

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy

Gaetano Alfredo Minerva

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy

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