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The present paper examines whether tax avoidance practices affect productivity in small and medium-sized enterprises (SMEs). This study also analyses whether this association is moderated by firm size, firm financial constraints, management control of cash flows, or information risk.

This study used a sample of Spanish SMEs for the period 2006–2020. Tax avoidance was measured as the difference between the statutory tax rate and the effective tax rate, and three proxies for productivity were used: overall productivity, capital productivity and labour productivity. Firm fixed effects regressions, propensity score matching and change regressions were used to address the potential sample selection bias and endogeneity between tax avoidance and productivity.

The results of the empirical analysis suggest that tax avoidance increases productivity in SMEs. This beneficial effect of tax avoidance was found to be higher in small firms than in medium-sized firms, but smaller in firms that faced financial constraints. Furthermore, the findings showed that the tax avoidance effect on productivity was stronger in firms where managers had less control over the cash flow –i.e. dividend-paying firms–, and weaker in firms with lower quality of financial information – i.e. firms with qualified audit reports.

This study contributes to the research on the economic consequences of tax avoidance by examining its impact on firm-level productivity in SMEs. From additional analyses, the findings of the study suggest that the positive effect of tax avoidance on firm productivity depends on firm size, the financial slack of the firm, and the costs of agency conflicts and information problems associated with tax avoidance.

The results of this study have implications for SMEs, suggesting that cash flows obtained through tax avoidance, if properly used, may increase firm productivity. In planning their tax avoidance practices, SME managers could take advantage of specific tax incentives designed for SMEs, which is particularly relevant given the low-productivity levels of these firms. The findings also highlight the importance of maintaining high-quality information and implementing mechanisms to mitigate the agency risks associated with tax avoidance to enhance the productivity of SMEs.

This study provides important insights to policymakers on SME tax policy, supporting the special tax rules for SMEs – in force in many OECD and EU countries – which aim to create an environment conducive to SME growth. The findings of the study also have macroeconomic implications, given the importance of firm productivity as a determinant of economic growth and the relevance of SMEs in most national economies.

This study provides novel empirical evidence on the effects of tax avoidance on firm-level productivity in SMEs. Despite the prevalence of SMEs as the predominant type of organization in most countries, no prior research has comprehensively examined this issue for this type of firm. This research question was addressed by considering proxies for overall, capital, and labour productivity and by examining how SME characteristics affect this relationship.

This analysis examines the relationship between corruption and firm productivity in Vietnam.

The authors apply the system generalized method of moments estimation approach on a panel dataset constructed from comprehensive enterprise surveys covering all the sectors over the 2011–2020 period.

The results confirm a non-linear relationship between corruption and firm productivity. Where corruption is severe, leaving corruption alone tends to benefit firm productivity because efforts to control corruption are likely to cause greater delays. In less corrupt provinces, corruption appears to harm firm productivity while efforts to control corruption provide significant productivity gains. This U-shaped relationship is confirmed for small firms and those in the private sector sub-samples. Intriguingly, this study reveals that the U-shaped relationship does not apply to micro, medium, large firms, state-owned firms and foreign-invested firms because corruption is found to have no significant impact on productivity among these sub-samples. Changes in regulations after 2014 toward promoting a transparent business environment are shown to foster the positive impact of lowering corruption on firm productivity.

This study suggests that lowering corruption is beneficial for firm productivity at the micro level. However, where corruption is severe, monitoring corruption alone is likely to cause adverse effects on productivity due to increased bureaucratic delays. Institutional reforms might play an important role in leveraging the effects of lowering corruption on productivity in highly corrupt areas.

This paper sheds new light on the relationship between corruption and firm productivity in the broad existing literature and especially in the limited number of studies for Vietnam.

This study investigates the effect of managerial ability on labor productivity by analyzing various methods in the firm-year panel data of listed firms in South Korea from 2002 to 2019. Managerial ability was analyzed using the measurement method of Demerjian et al. (2012), while labor productivity was analyzed using value-added and sales. The authors find that managerial ability has a positive effect on labor productivity. In other words, the productivity of employees improves with the appointment of a manager with higher abilities. The study’s findings suggest that firms should consider managerial ability as a means of improving labor productivity.

This paper aims to discuss the firm productivity premium for servitized firms. It discusses servitization across the product value chain and estimates the effects of the range and extent of servitization on productivity premium in manufacturing firms.

This paper develops a conceptual framework and tests the hypotheses on the effects of servitization on productivity premium using linear regression models with a sample of 20,837 Russian manufacturing firms gathered from the Ruslana Bureau van Dijk database and the Russian customs service.

Servitized firms exhibit higher total factor productivity and labor productivity. The labor productivity premium increases with the number of services offered. However, the impact of services on productivity varies along the product value chain: postmanufacturing and postsales services enhance productivity premium, while manufacturing and back-office services diminish them. The effect of establishment services remains ambiguous.

This paper offers an analytical framework for firms to assess their servitization strategies. These strategies should be gradual, focused on enhancing firm efficiency rather than being an end goal. Firms should initiate the process by introducing services at the postproduction and postsales stages of the product creation chain to achieve productivity premium.

The paper extends the evidence on firm-level productivity drivers and contributes to the servitization theory. A servitization strategy should be portfolio-based, considering both the potential gains and losses in productivity resulting from the implementation of specific services.

This chapter applies the five drivers of productivity framework to regional microdata for Egypt and extends it by introducing an index of industrial clusters as an explanatory factor of the productivity performance of local private sector firms. Applying structural equation models, the geographic concentration of sectoral economic activity is found to have a positive and statistically significant effect on labor productivity. The transmission mechanism is conjectured to be the positive spillovers that are created, which local firms can tap into. In contrast, a higher concentration of skilled workers in an industrial sector in a region is associated with lower levels of labor productivity – a finding that suggests there may be structural deficiencies in the allocation of skilled workers. Regional policy should focus on net investments in gross capital formation throughout the country, for which the national and regional governments should improve how public investments are managed and the institutional framework – including the rule of law, bureaucracy and red tape, conflict of interest, transparency, and governance – so that private investment (both local and foreign) may substantially increase.

There is growing empirical evidence that firm heterogeneity is technologically non-neutral. This chapter extends the Gandhi, Navarro, and Rivers (2020) proxy variable framework for structurally identifying production functions to a more general case when latent firm productivity is multi-dimensional, with both factor-neutral and (biased) factor-augmenting components. Unlike alternative methodologies, the proposed model can be identified under weaker data requirements, notably, without relying on the typically unavailable cross-sectional variation in input prices for instrumentation. When markets are perfectly competitive, point identification is achieved by leveraging the information contained in static optimality conditions, effectively adopting a system-of-equations approach. It is also shown how one can partially identify the non-neutral production technology in the traditional proxy variable framework when firms have market power.

The main purpose of this study is to examine the impact of imported inputs on firms' productivity in selected South Asian economies, namely Pakistan, India and Bangladesh. Furthermore, this study explores the complementarity between firms' capabilities and imported inputs in an augmented productivity framework.

A dataset comprising 7117 manufacturing firms of selected South Asian economies was taken from the World Bank for 2013 and 2014. The empirical analysis was based on stochastic frontier models, the ordinary least square method and instrumental variable estimation techniques.

The empirical results show that imported inputs have positive and significant effects on the firms' productivity in the selected countries. Moreover, the study findings demonstrate that firms' capabilities play a complementary role in expanding the firms' production frontier.

The study outcomes suggest that reducing tariffs on imported inputs will enhance the firms' productivity in the selected emerging economies. However, the study further finds that the potential gain of imported inputs is conditional on the firm's capabilities. It implies that firms operating in these countries can improve their performance by allocating more resources to capabilities, such as workers’ training, management and internal R&D effort.

The existing literature on the subject is sceptical about the positive impact of imported inputs on firms' productivity in the case of developing countries. In this regard, the shortage of skilled labour and firms' capabilities are compelling rationales that need to be explored. Thus, the potential contribution of the study lies in explaining the moderating role of firm's capabilities operating in the selected emerging economies in the nexus of imported inputs and productivity.

This study aims to dissect firm knowledge into two main types: internal firm knowledge (knowledge workers) and external firm knowledge (relational knowledge with other firms). This study aims to investigate how each type affects the productivity of the firms. This study also examines how this effect differs among Egyptian firms in the agriculture, manufacturing and service sectors.

The authors use firm-level data in Egypt on the sectoral level. The properties of instrumental variables regression using two-stage least-squares estimation are adopted to overcome endogeneity and omitted variable bias in the empirical estimations.

The study’s findings reveal that the effects of internal and external knowledge on the firm productivity are sector-specific; knowledge-workers and relational knowledge are two times more effective for agriculture than manufacturing and service firms; external knowledge plays a vital role in increasing productivity relative to internal knowledge for the manufacturing sector; finally, internal and external knowledge has the same effect on the service firms.

This research adds to the body knowledge-based theory of the firm by examining the effects of internal and external knowledge on the firms’ productivity. In particular, the paper differentiates this effect across three sectors: agriculture, manufacturing and services. This paper also suggests a novel empirical methodology to address endogeneity and omitted variable bias in this literature of firm knowledge and productivity.

This paper aims to conduct research to examine the impact of Internet adoption on the productivity of firms in non-urban China.

The study investigates the impact of Internet adoption on firms' productivity in non-urban China. More specifically, the authors conduct a comprehensive and rigorous study while addressing concerns related to firm-level endogeneity by utilizing firm-level panel data. Information on firms in non-urban areas is collected from China's Annual Surveys of Industrial Firm data. For robustness, the authors implement the instrumental variables approach and propensity score matching estimations to strengthen the evidence for suggestive causal inference. Furthermore, the authors also examine the mechanisms and group heterogeneity.

Evidence indicate that the adoption of Internet technology positively impacts the total factor productivity (TFP) of firms in non-urban areas. According to the heterogeneity analysis, the marginal effect of Internet adoption is more significant and pronounced for labor-intensive, private and small-scale manufacturing firms. Moreover, additional evidence suggest that Internet adoption is beneficial for non-urban firms in expanding their business and enlarging their market. It has also been found that the positive effect of Internet adoption on firms' TFP is amplified by expanding public infrastructure.

The current study supports that the informatization strategy benefits non-urban firms and promotes rural revitalization. The findings suggest the possibility of firms borrowing market size from the closest cities and supporting the ongoing policies of investing in broadband infrastructure to narrow the urban-rural digital gap in China.

The health costs associated with obesity are increasing in developed and emerging economies. Particularly important, though remaining underexplored, is the overall impact of health risks associated with being obese and overweight on the productivity of firms in a cross-country setting. The purpose of this paper is to address these issues.

This paper exploits the natural variation in the percentage of obese males in the population as an exogenous health risk randomly distributed across firms in each country.

Investigating this link for a sample of around 80 emerging countries, the evidence suggests a significant negative effect of health risks on productivity.

The identification assumptions are checked using different approaches to establish the robustness of the empirical link.

This study helps us understand the microlevel effects of the rising average obesity rate. This knowledge is rare in emerging economies which are facing the highest risks of obesity and cardiovascular diseases associated with it.