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The purpose of this paper is to contextualize a productivity contest between a local manufacturer versus a foreign one, both of whom sell an identical product in the local market, within the two companies' respective economies. The intent is to delineate the conditions under which one firm gains a competitive advantage over the other.

The purchasing power parity model is reformulated to account for differential rates of macroeconomic productivity gain in the two countries. The implications of these differential rates vis‐à‐vis the productivity contest between the local and foreign manufacturer are then explored.

To gain a competitive advantage over its foreign rival, the local firm must achieve a net productivity improvement relative to its (local) economy that surpasses the net productivity improvement of the foreign rival relative to its (foreign) economy. Thus, the local firm stands in a rivalrous relationship not solely with its foreign competitor but also with the average firm in its very own (local) economy and in a complementary relationship with the average firm in the foreign economy. The foregoing is shown to be a generalization of the Dutch disease phenomenon and to imply that national efforts to attain competitive advantage are self‐contradictory.

In its productivity contest with its foreign rival, the local firm's management should not focus myopically on a comparison of the two firms' rates of net productivity improvement. Rather, the focus should be on the two firms' differential rates of net productivity improvement relative to their respective economies.

The main conclusions of this paper, which derive from the effect of productivity changes on exchange rates, are both stark and original. A firm is engaged in a productivity contest with the average firm in its own economy. Thus, national efforts to enhance productivity are counter productive to a firm whose productivity improvement lags behind that of the average domestic firm.

The purpose of this study is to examine the impact of public accounting firms' mix of service revenue on their average productivity measured by total revenue per partner.

Using data from Public Accounting Report on top public accounting firms by revenue, an OLS regression model is applied by regressing revenue per partner on the percentage of revenue generated from auditing and attest, tax, management consulting, and other services independently.

Results show that the proportion of auditing and attest service revenue is negatively associated with public accounting firms' productivity. However, the proportion of other services revenue, other than tax and management consulting services, is positively associated with productivity. Additional investigation shows that if public accounting firms provide other services in their mix of services, then tax and management consulting services do not contribute to these public accounting firms' productivity.

Results of this study cannot be generalized beyond the top 100 public accounting firms, and the measurement of revenue per partner ignores the exact number of partners within different service areas.

Although auditing and attest services are considered core services of public accounting firms, they do not increase the productivity of the firm.

This study helps in assessing whether average productivity of public accounting firms is affected by the proportion of a specific type of service in the post‐SOX era.

This paper explores the link between skill and qualification mismatch and labor productivity using cross-country industry data for 19 OECD countries. Utilizing mismatch indicators aggregated from micro-data sourced from the recent OECD Survey of Adult Skills (PIAAC), the main results suggest that higher skill and qualification mismatch is associated with lower labor productivity, with over-skilling and under-qualification accounting for most of these impacts. A novel result is that higher skill mismatch is associated with lower labor productivity through a less efficient allocation of resources, presumably because when the share of over-skilled workers is higher, more productive firms find it more difficult to attract skilled labor and gain market shares at the expense of less productive firms. At the same time, a higher share of under-qualified workers is associated with both lower allocative efficiency and within-firm productivity – that is, a lower ratio of high productivity to low productivity firms. While differences in managerial quality can potentially account for the relationship between mismatch and within-firm productivity, the paper offers some preliminary insights into the policy factors that might explain the link between skill mismatch and resource allocation.

In this chapter, we analyzed the effects of internationalization on innovation, productivity, and firm performance among multinational pharmaceutical companies as representatives of a global knowledge-based industry. The empirical analysis used multiple stepwise regressions based on a sample of 149 firms headquartered in Europe and the US. The results indicate that innovation outcomes are positively correlated to the number of foreign subsidiaries (scope internationalization), whereas surprisingly, formal research and development (R&D) does not seem to directly influence innovation. This suggests that the firms benefit from local overseas subsidiaries to create and implement new innovative offerings. The number of foreign subsidiaries has a U-shaped relationship to patent productivity suggesting that firms can gain advantages by locating cost-intensive activities in low-cost countries and critical tasks in advanced market locations. Firm performance has a U-shaped relationship to sales abroad (scale internationalization) and the relationship is further enhanced by a high focus on R&D. This suggests that sales abroad enable scale economies, where R&D improves quality and relevance of products and thereby boosts performance. Finally, to validate the findings we conducted two semi-structured interviews with representative industry experts and gained further insights for an extended interpretation of results.

Recent literature on firm-level heterogeneity and trade has emphasized a self-selection mechanism: only the most productive firms can recover the transaction (sunk) costs for serving foreign markets and become exporters. The role of trade integration is that a productivity gap between exporters and nonexporters becomes lower when the market becomes more integrated due to a fall in trade costs. The focus of this chapter is the role of EU harmonization of food regulations in explaining the intra-EU export-productivity premium. The food industry is an interesting case to examine because many directives and regulations of the Single Market Program concern this important economic sector and have the potential to affect trade and productivity. We use data on Dutch food processing firms for the 1979–2005 period, which we link with a dataset that codes food products subject to EU harmonization. The chapter confirms that more productive firms are more likely to enter the EU export market. The result of EU harmonization is that this probability increases. Second, we find a positive and significant export-productivity premium: that is, firms that export to other EU markets are more productive than nonexporting firms. This finding is robust to the estimation technique and the way we measured TFP growth. Third, when we test whether the export-productivity premium is affected by EU harmonization, we find weak evidence that is the case for Dutch food processing firms: much depends on the estimation method, the way we measure TFP growth, and the population of exporting firms.

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.

The study evaluates the effects of GVC participation on firm productivity and profitability. Hence this study aims to find evidence whether there is a clear difference between the productivity and profitability effects of simple and complex backward and forward participations for Turkish firms.

The authors employ a firm level data from the Türkiye's both first and second top 500 industrial enterprises from 1993 to 2019. In addition, the authors calculate country-sector level both backward and forward GVC participation indices with their simple and complex sub-indices for each year from 1990 to 2015 from the Full Eora data of the Eora Global Supply Chain Database. The authors estimate the model with OLS and fixed effects. To understand the role of the 2008 global crisis, the authors also undertake estimations for the pre-crisis and post-crisis. The authors also divide the data by R&D intensity of sectors.

While backward GVC participation lowers both labor productivity and profitability growth, forward GVC participation promotes both. Moreover, simple and complex backward participation have similarly negative effects on productivity and profitability growth, simple and complex forward participation have the completely opposite effects though. The authors then provide substantial evidence for the differing effects of participation on productivity and profitability growth between pre-crisis and post-crisis periods. Interestingly, backward participation has a negative impact for both hi-tech and low-tech firms while forward participation boosts the productivity growth only for low-tech firms, probably due to the relatively more upstream position of low-tech firms.

To the best of the knowledge, no previous study has yet examined the profitability effects of GVC for firms. Second, in addition to overall backward and forward GVC participation rates, the authors also calculate and utilize simple and complex GVC measures in the estimations. Third, to reveal whether the global financial crisis leads to a shift in the productivity and profitability effects of GVCs, the authors separately run the regressions for the pre- and post-crisis periods. Fourth, the authors then investigate the argument that hi-tech sectors/firms could benefit more from joining GVCs compared to firms in low-tech technology sectors.

The study aims to examine the joint effects of foreign ownership (FO) and involvement in global value chains (GVCs) on the productivity performance of firms from a catching-up country (Poland) and a leader economy (Germany).

The authors use micro-level data on firms combined with several sector-level GVC participation measures. The authors investigate whether the link between productivity and the overall sectoral degree of involvement in global production structures depends on a firm's ownership. The authors verify the robustness of the obtained results by using an instrumental variables approach and weighted regression.

The results show that domestically owned firms are less productive than foreign ones, which is particularly true at low GVC participation levels. However, as GVC involvement increases, the FO productivity premium decreases, leading to productivity catching up between foreign and domestically owned firms. This mechanism is similar in Poland and Germany. However, in the leader country (Germany), the productivity performance of domestically owned firms is more stable along the distribution of GVC involvement.

This study contributes to the foreign direct investment (FDI)–productivity literature by comparing the catching-up and developed countries' perspectives and incorporating the productivity–GVC relationship into the FDI analysis. The authors show that the FO premium is not confined to the developing context but is also present in a leader country. Moreover, the link between productivity and the overall sectoral degree of involvement in global production structures depends on a firm's ownership.

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.