How and why do firms differ?

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Memorandum ; No. 2002,30

Classification and Topics

• 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

Contributors, Places and Time

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

Further information

• Handle: http://hdl.handle.net/10419/62996
• Last update: 10.03.2025, 11:44 AM CET