The Effect of SME Productivity Increases on Large Firm Productivity in the EU

Andre van Stel*, Boris Lokshin, Nardo de Vries

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

4 Citations (Web of Science)

Abstract

We examine the impact of labour productivity growth of small and medium-sized enterprises (smes) on labour productivity growth of large firms in a 19-year panel of 26 european countries. We apply a dynamic panel data model that allows for macro-level interdependencies in productivity between small and large firms. Our main finding concerns a sizable positive effect of labour productivity increases of smes on the productivity of large firms. This positive effect is especially evident for medium-sized and small firms (rather than micro firms). Furthermore, the impact of sme productivity on large-firm productivity is increasing with the size of the sme sector. Our analysis indicates that scale effects play a role in the transmission of productivity effects from smes to large firms, both in terms of the size of individual smes (medium-sized and small versus micro) and in terms of the share of the sme sector in the economy.
Original languageEnglish
Pages (from-to)332-353
Number of pages22
JournalKyklos
Volume72
Issue number2
DOIs
Publication statusPublished - May 2019

Keywords

  • RESEARCH-AND-DEVELOPMENT
  • FOREIGN DIRECT-INVESTMENT
  • DEVELOPMENT COOPERATION
  • KNOWLEDGE SPILLOVERS
  • REGIONAL-DEVELOPMENT
  • EMPIRICAL-EVIDENCE
  • CREATES JOBS
  • INNOVATION
  • GROWTH
  • COMPETITION

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