How does Knowledge Spur the Productivity of Private Egyptian Firms? An Instrumental Variable Approach

27 Pages Posted: 20 Apr 2022

See all articles by Mina Sami

Mina Sami

The American University in Cairo

Wael Abdallah

The American University in Cairo

Date Written: April 6, 2022

Abstract

This study dissects firm knowledge into two main types: Internal firm Knowledge (Knowledge workers) and External firm Knowledge (Relational Knowledge with other firms). The major goal is to investigate how each type affects the productivity of the firms. This article also examines how this effect differs among Egyptian firms in the agriculture, manufacturing, and service sectors. The authors use firm-level data in Egypt on the sectoral level. The properties of instrumental variables regression using two-stage least-squares (2SLS) estimation are adopted to overcome endogeneity and omitted variable bias in the empirical estimations.

The study's findings reveal that (a) the effects of Internal and External knowledge on the firm productivity are sector-specific. (b) Knowledge-workers and relational knowledge are two times more effective for agriculture than manufacturing and service firms. (c) External knowledge plays a vital role in increasing productivity relative to internal knowledge for the manufacturing sector. (d) Finally, internal and external knowledge has the same effect on the service firms.

Keywords: Productivity, Agriculture, Manufacturing, Services, Egypt

JEL Classification: 032, D23

Suggested Citation

Sami, Mina and Abdallah, Wael, How does Knowledge Spur the Productivity of Private Egyptian Firms? An Instrumental Variable Approach (April 6, 2022). Available at SSRN: https://ssrn.com/abstract=4077241 or http://dx.doi.org/10.2139/ssrn.4077241

Mina Sami (Contact Author)

The American University in Cairo ( email )

AUC Avenue - P.O. Box 74
Cairo
Egypt

HOME PAGE: http://https://www.aucegypt.edu/fac/minaayad

Wael Abdallah

The American University in Cairo ( email )

AUC Avenue - P.O. Box 74
Cairo
Egypt

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