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Firm dynamics and productivity growth: a comparison of the retail trade and manufacturing sectors

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  • John R. Baldwin
  • Wulong Gu

Abstract

This article examines how the reallocation of market shares differs in the retail trade and manufacturing sectors and what it reveals about the nature of competition in the two sectors. It compares and contrasts the amount and type of firm dynamics and examines its contribution to aggregate productivity growth in those two sectors. The potential competitive pressures acting on these two very different industries were very similar in that about the same proportion of firms entered and exited both industries. The survival processes associated with exit were similar. There were similar differences in productivity between entrants and the exits that they drove out. While the potential for turnover was the same, its realization was not. Retail entrants bought a different option when they experimented with entry that suggests different entry costs. They started at a larger relative size upon entry. The differences that occurred in relative entry size gave retail entrants a greater proportional share of output and inputs and led the turnover process to make a greater contribution to aggregate productivity growth. Copyright 2011 The Author 2011. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.

Suggested Citation

  • John R. Baldwin & Wulong Gu, 2011. "Firm dynamics and productivity growth: a comparison of the retail trade and manufacturing sectors," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 20(2), pages 367-395, April.
    • Handle: RePEc:oup:indcch:v:20:y:2011:i:2:p:367-395
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    File URL: http://hdl.handle.net/10.1093/icc/dtq064
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    Cited by:

    1. Ismaëlh Cissé & Jean Dubé, 2024. "Survival of new and small retail businesses facing mega‐retailers in non‐metropolitan areas—The case of Walmart in the province of Quebec," Growth and Change, Wiley Blackwell, vol. 55(1), March.
    2. Someshwar Rao, 2011. "Insights from Latin America for Canada: A Review Article on The Age of Productivity: Transforming Economies from the Bottom Up," International Productivity Monitor, Centre for the Study of Living Standards, vol. 21, pages 70-81, Spring.
    3. Giovanni Dosi & Emanuele Pugliese & Pietro Santoleri, 2017. "Growth and survival of the `fitter'? Evidence from US new-born firms," LEM Papers Series 2017/06, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    4. John R. Baldwin & Wulong Gu & Beiling Yan, 2013. "Export Growth, Capacity Utilization, and Productivity Growth: Evidence from the Canadian Manufacturing Plants," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 59(4), pages 665-688, December.
    5. Marco Vivarelli, 2012. "Entrepreneurship and Post-Entry Performance: the Microeconomic Evidence," DISCE - Quaderni del Dipartimento di Scienze Economiche e Sociali dises1286, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    6. Andrew Sharpe, 2015. "Ontario's Productivity Performance, 2000-2012: A Detailed Analysis," CSLS Research Reports 2015-04, Centre for the Study of Living Standards.
    7. Ryota Nakatani, 2024. "Multifactor productivity growth enhancers across industries and countries: firm-level evidence," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 14(2), pages 401-446, June.
    8. Blit, Joel, 2020. "Automation and reallocation: The lasting legacy of COVID-19 in Canada," CLEF Working Paper Series 31, Canadian Labour Economics Forum (CLEF), University of Waterloo.
    9. Marco Vivarelli, 2013. "Is entrepreneurship necessarily good? Microeconomic evidence from developed and developing countries," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(6), pages 1453-1495, December.
    10. Hyytinen, Ari & Maliranta, Mika, 2011. "Firm Lifecycles and External Restructuring," Discussion Papers 1253, The Research Institute of the Finnish Economy.
    11. Vivarelli, Marco, 2012. "Drivers of entrepreneurship and post-entry performance : microeconomic evidence from advanced and developing countries," Policy Research Working Paper Series 6245, The World Bank.
    12. Ilke Van Beveren & Stijn Vanormelingen, 2014. "Human capital, firm capabilities and productivity growth," Working Paper Research 257, National Bank of Belgium.
    13. Janghee Cho & Hyunbae Chun & Yoonsoo Lee, 2023. "Productivity dynamics in the retail trade sector: the roles of large modern retailers and small entrants," Small Business Economics, Springer, vol. 60(1), pages 291-313, January.
    14. Janghee Cho & Hyunbae Chun & Yoonsoo Lee, 2022. "Productivity Dynamics in the Retail Trade Sector: The Roles of Large Modern Retailers and Small Entrants," Working Papers 2202, Nam Duck-Woo Economic Research Institute, Sogang University (Former Research Institute for Market Economy).
    15. Roberta Montebello & Jude Darmanin, 2021. "Saving behaviour in Malta: Insights from the Household Budgetary Survey," CBM Working Papers WP/04/2021, Central Bank of Malta.
    16. Andrew Eckert & Heather Eckert, 2014. "Regional Patterns in Gasoline Station Rationalization in Canada," Journal of Industry, Competition and Trade, Springer, vol. 14(1), pages 99-122, March.
    17. Jens Krüger, 2014. "Intrasectoral structural change and aggregate productivity development: robust stochastic nonparametric frontier function estimates," Empirical Economics, Springer, vol. 46(4), pages 1545-1572, June.
    18. Hyytinen, Ari & Maliranta, Mika, 2013. "Firm lifecycles and evolution of industry productivity," Research Policy, Elsevier, vol. 42(5), pages 1080-1098.
    19. Rajesh, R. & Agariya, Arun Kumar & Rajendran, Chandrasekharan, 2021. "Predicting resilience in retailing using grey theory and moving probability based Markov models," Journal of Retailing and Consumer Services, Elsevier, vol. 62(C).

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