The sources of firms’ success
Colin Hottman, Stephen Redding, David E. Weinstein 14 October 2014
Recent research highlights that important factors for firm size are costs, quality, markups, and product scope. This column explores the sources that make these factors differ across firms. Quality, including in the form of variation in product scope, is the chief determinant of firm sales. Marginal cost variations do not matter much for firm size.
Why are some firms larger than others? Some companies, such as the Coca-Cola Corporation, generate billions of dollars of sales and dominate the markets in which they operate. Other companies account for only a small fraction of the sales of their larger competitors. What accounts for these vast differences in firm performance?
Industrial organisation Productivity and Innovation
firm productivity, costs of production, production quality, sales
Firm-level data: Who said that they are too difficult to use for policy?
Filippo di Mauro 11 March 2014
Policies aimed at enhancing firm productivity may greatly benefit from firm-level evidence. Unfortunately, micro-founded data, particularly of cross-country nature, remain largely unavailable. This column presents a new firm-level database built by a research network of the EU system of central banks (CompNet). This data base allows investigating how firm size and labour costs interact at different levels of productivity. This new cross-country data base, and its potential to expand, could be of great policy value.
firm productivity, firm-level data, CompNet
Does exporting improve firm performance?
Dean Yang 24 March 2009
Many emphasise the importance of export growth in economic development, but does exporting increase economic growth or does growth increase exports? This column presents evidence from a natural experiment – demand shocks experienced by Chinese exporters due to the Asian financial crisis – suggesting that exporting improves firm performance.
Participation in export markets is often viewed as a prerequisite for economic growth in developing countries. For example, in a report on the East Asian miracle, the World Bank (1993) pointed to export-oriented economic policies as a key factor behind the region’s rapid economic development.
exports, firm productivity, Learning-by-exporting
Help! Not just anybody: The locational choice of Japanese MNC affiliates
Sandra Poncet 16 February 2009
This column says that less-productive Japanese firms are more sensitive to distance and institutional quality in their locational decisions abroad. Alternatively, the greater responsiveness of low-productivity firms to the presence of an export promotion agency or a Japanese community indicates that networks and spillovers may help to mitigate these impediments.
Japanese firms are pessimistic about current and future domestic sales growth, given Japan’s declining birth rate and aging society. Facing weak domestic demand in recent years, Japanese firms have increased their sales and profits by exporting more, especially to the US.
FDI, Japan, firm productivity