Arbeitspapier

How and why do firms differ?

How do firms differ, and why do they di.er even within narrowly defined industries? Using evidence from six high-tech, manufacturing industries covering a 24-year period, we show that di.erences in sales, materials, labor costs and capital across firms can largely be summarized by a single, firm-specific, dynamic factor, which we label effciency in the light of our structural model. The model contains the complete system of supply and factor demand equations. It suggests that e.ciency is strongly linked to profitability and firm size, but it is unrelated to labor productivity. Our second task is to understand the origin and evolution of the differences in effciency. Among the firms established within the 24 year period that we consider, permanent differences in efficiency dominate over di.erences generated by firm-specific, cumulated innovations.

Language
Englisch

Bibliographic citation
Series: Memorandum ; No. 2002,30

Classification
Wirtschaft
Multiple or Simultaneous Equation Models: Panel Data Models; Spatio-temporal Models
Model Construction and Estimation
Firm Behavior: Theory
Subject
effciency
firm heterogeneity
labor productivity
intrinsic differences
firmspecific innovations
state space models
maximum likelihood
Produktivität
Theorie der Unternehmung
Innovation
Markteintritt
Theorie
Maximum-Likelihood-Methode

Event
Geistige Schöpfung
(who)
Klette, Tor Jakob
Raknerud, Arvid
Event
Veröffentlichung
(who)
University of Oslo, Department of Economics
(where)
Oslo
(when)
2002

Handle
Last update
10.03.2025, 11:44 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Klette, Tor Jakob
  • Raknerud, Arvid
  • University of Oslo, Department of Economics

Time of origin

  • 2002

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