Document Type
Working Paper
Publication Date
6-10-2021
Language
en-US
Abstract
It is widely held that more productive firms grow faster, thus reallocating resources and raising aggregate productivity. Yet little empirical research identifies the features of the mechanisms affecting this process. This paper develops and tests a general model encompassing several mechanisms used to overcome informational frictions to growth. We find that firm size, productivity dispersion, and large firm investments in intangibles are all significantly related to changes in firm growth in response to productivity. These factors can account for much of the decline in the response to productivity since 2000 (Decker et al. 2020). Also, industry concentration is directly related to aggregate productivity growth.
Recommended Citation
James Bessen & Erich Denk,
From Productivity to Firm Growth
(2021).
Available at:
https://scholarship.law.bu.edu/faculty_scholarship/1351
