The Impact of Firm Size and Market Concentration on Firm Productivity

Abstract

This study investigates the impact of firm size and market concentration on firm productivity in Indonesian manufacturing. Firm size has been enduring interest in studies on firm productivity as the impact can be positive or negative. On the other hand, market concentration has increasingly been a key concern in evaluating firm productivity. This study used firm-level panel data of 6,783 manufacturing firms (47,481 observations) across 33 provinces of Indonesia. Two methods were applied in estimating the data; those methods were adjusted-autocorrelation OLS and random effect GLS. The results show that firm size has a significant positive effect on firm productivity, indicating that a large-scale firm experiences higher productivity than a small size firm. In addition, market concentration appears to have a negative impact on firm productivity, suggesting that a firm in a more concentrated industry tends to be less productive. The implication of this study suggests that a firm produces on a large scale and competes in a less concentrated market.

The Effect of Financial Distress and Transfer Pricing on Tax Avoidance in Multinational Companies Listed on Indonesia Stock Exchange (IDX) in 2020-2022 Period

“…This indicates that SIZE has a significantly negative effect on Tax Avoidance, rejecting H4. These findings align with research by Julianty et al (2023), Suyanto et al (2022), and Maulana et al (2018, suggesting that the maturity level of a company, regardless of its size, makes it more reliable to financial institutions and more likely to meet its financial needs, reducing the tendency to engage in tax avoidance. The last variable is LEV, and the results indicate that the LEV control variable does not have a significantly negative effect on tax avoidance, with a value of 0.807, leading to the rejection of H5.…”