Firm Characteristics and Total Factor Productivity: Evidence from Indian Manufacturing Firms

Abstract

Measurement of the productivity of firms is an important research issue in productivity literature. Over the years, various methods have been developed to measure firm productivity across the globe. But there is no unanimity on the use of methods, and research on the identification of factors which determine productivity has been neglected. In view of these gaps, this study aims to measure total factor productivity (TFP) and tries to identify firm-specific factors which determine productivity of Indian manufacturing companies. The study is based on data of 616 firms from 1998–99 to 2012–13. To measure TFP, the Levinsohn–Petrin (L-P) method has been employed, and the fully modified ordinary least squares (FMOLS) method has been used to identify factors that affect TFP. The results reveal that embodied and disembodied technology plays a crucial role in the determination of productivity overall in manufacturing and other sub-industries. Similarly, the size of firms and intensity of raw material imports are also important for the determination of productivity across the sub-industries. JEL Classification: C14, C33, D24, L60

Total Factor Productivity of Agricultural Firms in Vietnam and Its Relevant Determinants

“…With respect to the impact of firm size and age, our empirical results demonstrated that firms >200 workers were more productive than the very small and small sizes (<200 employees), of which enterprises >300 workers were the most productive ones. These findings were in line with those of Van Biesebroeck (2005) for African economies and Satpathy et al (2017) for India but were in contrast to those of Srithanpon (2016) and Fernandes (2008) for the case of Thailand and Bangladesh, respectively. Van Biesebroeck (2005) also noted that larger firms were shown to be more productive in developed countries like the United States.…”

Foreign direct investment productivity premium and foreign affiliates' heterogeneity: A comparison between advanced and emerging market overseas investments in the EU

“…Firm size may have positive effects on firm TFP if larger firms benefit from learning‐by‐doing effects, exploit scale economies, or access capital at lower costs than smaller firms (Biesebroeck, ; Jovanovic, ; Lee & Tang, ; Malerba, ). On the other hand, there could be negative effects on TFP if large firms are not able to respond easily to the changing market environment, due to their inflexibility (Satpathy, Chatterjee, & Mahakud, ; Tornatzky & Fleischer, ; Utterback, ). As far as the effect of firm age on firm TFP, we may expect older firms to have higher TFP than younger ones, due to their accumulated learning over the past (Jensen, McGuckin, & Stiroh, ; Jovanovic & Nyarko, ); or that younger firms produce with greater efficiency than older ones because they are more capable of adapting to a changing environment.…”

Factors Affecting Firm’s Annual Turnover in Selected Manufacturing Industries of India

“…Previous studies have used different factors such as gross value added and output as a dependent variable to assess the performance, technical efficiency (TE), and determinants of firms in the Indian manufacturing sector (Rajesh, 2007;Mazumdar, Rajeev & Ray, 2009;Kumar & Arora, 2012;Pattnayak & Chadha, 2013;Sahu, 2015;Mitra, Sharma & Véganzonès-Varoudakis, 2016;Kapoor, 2016;Sen & Das, 2016;Chaudhuri, 2016;Satpathy, Chatterjee & Mahakud, 2017;Kumar & Paul, 2019;Chawla & Manrai, 2019;Singh, Ashraf & Arya, 2019). The summary of the most relevant studies is given in Table 3.…”