Jenny Oliveros Lao Phillips is an Associate Professor of Human and Social Sciences at the University of Saint Joseph (USJ). She has been the Dean of the Faculty of Business and Law since 2018. Prof. Phillips held a PhD in Business Administration from USJ in 2015 and was awarded the highest honour of Summa cum Laude. With an MBA in General Management jointly awarded by the Inter-University Institute of Macau and the Catholic University of Portugal (2003), an MA in English Studies: Literature Specialization from the University of Macau (2007), and a Bachelor in Tourism Business from the Institute for Tourism Studies (2000), Prof. Phillips has been teaching a wide range of courses for the past 19 years including Creativity Innovation and Entrepreneurship, Managing Social Service Organizations, Product Design and Development, Family Business Management, Marketing for Entrepreneurs, Global Strategic Management, Literature and Creative Writing, to name a few. Prof. Phillips is also a Cantonese-English interpreter, a translator, a writer and a poet. She wrote the column “Made in Macao” in the Macau Daily Times on the culture and tradition of Macao. Her research interests and publications include organisational behaviour, innovation and entrepreneurship, social enterprises, family businesses, government studies, Macao’s tourism industry, and theatre studies.
Károly Miklós Kiss is an Associate Professor of economics at University of Pannonia (UoP) and a senior research fellow at HUN-REN Centre for Economic and Regional Studies. He has been the Head of Department of Economics at UoP, Head of Applied Economics Research Unit at UoP and Head of Economics of Networks Research Unit at the Institute of Economics of the Hungarian Academy of Sciences. Prof. Kiss is a Panel Member of the Hungarian National Research, Development and Innovation Office (Economics Panel), Member of Hungarian Economic Association, Member of Hungarian Society of Economists, Member of International Atlantic Economic Society. Prof. Kiss held a PhD in Economics from University of Pannonia in 2009 and was awarded the highest honour of Summa cum Laude. He holds a BSc and MSc in Economics from the Corvinus University Budapest. Prof. Kiss has been teaching a wide range of undergraduate, graduate and PhD courses at several universities related to Microeconomics, Industrial Organization, Theories of markets and competition, Economics of Networks, Economics of Regulation, Competition Policy, Economics of Information. His research is focused on Industrial Organization, Economics of regulation (mostly in network industries and public utilities), Economics of networks, Economics of Information (asymmetrical information). Prof. Kiss has participated, led and coordinated several international and national research projects, including for the Hungarian Communications Authority, the Hungarian Competition Authority and ministries.
Title: Large Intra-Industry Productivity Gaps Between Firms: Can They Persist and What Can Reduce Them?
Abstract: Economic theory suggests that
productivity differences between firms in
different markets or industries cannot persist
in the long term. Theoretical models of
competition and market theory show that
competitive pressure drives inefficient firms
out of the market, so that in the long run there
should not be significant productivity
differences. Nevertheless, many empirical
studies on productivity show that high
productivity differences persist between firms,
even within narrowly defined industries.
Syverson (2004) reports that in the U.S.
manufacturing sectors, the productivity of the
top ten percent (p90) of firms is twice the
productivity of the lowest ten percent (p10) of
firms on average, and it is even higher in some
sectors. According to Hsieh and Klenow (2009),
in China and India, the average p90-p10
productivity range is 5:1.
Productivity gaps can be reduced under
competitive pressure through two mechanisms: due
to market entries and exits, or through learning
(technology transfer) between firms. On the one
hand, competition can force inefficient firms to
exit, leaving only companies with similar high
efficiency in the market. This approach
concentrates on the lack or constrains of market
competition in explaining these large and
persistent productivity differences, proxied by
the dynamics of exits and entries (Syverson
2004, 2011), or competition advantages due to
export activities (Melitz 2003). For example,
Syverson (2004) examines the impact of spatial
substitutability in product markets. In their
study, they find that where producers are
spatially densely clustered in a market,
consumers can more easily switch between
suppliers, which increases the intensity of
competition locally and that an increase in this
substitutability crowds out less efficient
firms, leading to higher minimum and average
productivity levels and lower productivity
dispersion.
Alternatively, competition may force inefficient
firms to learn from more productive ones, so
that they catch up with highly productive firms
through knowledge and technology transfer
between firms. There are several channels for
knowledge and technology transfer between firms:
R&D links between firms, supplier (vertical)
links, or labour flows between firms. Following
Arrow (1962), worker mobility has long been
considered a major source of knowledge flow
across firms: the hiring firm benefits from the
embodied knowledge and skills of incoming labor,
which has a positive effect on wages and
productivity in the target company (Almeida and
Kogut 1999; Zucker, Darby, and Torero 2002;
Palomeras and Melero 2010; Stoyanov and Zubanov
2012) (Balsvik 2011; Poole 2013; Csáfordi et al.
2020). This suggests that knowledge transfers
between firms can decrease productivity
differences, while constraints to knowledge
transfers can explain why productivity
differences sustain. In this lecture I examine
how the intensity and structure of labor
mobility network between firms is associated
with the productivity dispersion of industries.
In empirical investigation, I use econometric
analysis of the Hungarian administrative and
firm data on labor mobility and productivity
dispersion (using a Hungarian administrative
data integration database, which is an
anonymized employer-employee linked panel
dataset created by matching five administrative
data sources). I argue that it is not only the
existence of labour flows between firms that is
of interest, but also the structure of this
channel of knowledge transfer, how it links
firms in the industry. I apply panel regression
models with dependent variable TFP (total factor
productivity) range (p90-p10 and p75-p25,
normalized by TFP median) of firms within each
industry. Explanatory variables are network
characteristics of labor mobility within an
industry and also between industries.
Keywords: labor mobility network, firm
productivity, knowledge spillover, network
characteristics, density, diversity
JEL codes: D22, J24, J60, M51
Acknowledgement: The research project was
financed by the Hungarian Scientific Research
Fund (K 135195).