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How does warfare affect firms' productivity?

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  • Andres F. Jola‐Sanchez

Abstract

Warfare afflicts millions and creates unparalleled operational challenges in the developing world. With data from war‐torn Colombia, I examine the effects of civil war on firms' total factor productivity (TFP) using propensity score and conflict hotspot models. I find that warfare increases TFP in service firms, such as public administration and defense, by up to 12.68%, whereas it decreases TFP in manufacturing and other nonservice companies by up to 3.64% a year after a violent episode occurs. This effect stems from intellectual capital growth and service firms' ability to create value from customer input.

Suggested Citation

  • Andres F. Jola‐Sanchez, 2022. "How does warfare affect firms' productivity?," Production and Operations Management, Production and Operations Management Society, vol. 31(5), pages 1940-1962, May.
    • Handle: RePEc:bla:popmgt:v:31:y:2022:i:5:p:1940-1962
    DOI: 10.1111/poms.13658
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