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Testing the effect of firm performance on growth for the Chilean agribusiness

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  • Brenes-Munoz, Thelma

Abstract

Previous studies of the industrial organization field find that the relationship between firm performance and growth is weak. The objective of this paper is to test this relationship at different quantiles of the firm growth distribution. We also explore the effect of technology gaps and export status on growth. For this, we use Penalized Quantile Regression with Fixed Effects on 420 Chilean agribusiness firms. Key results show that performance, measured as technical efficiency, has a significant and heterogeneous impact on revenue growth. The effect is stronger on slow growing firms: one point increase in technical efficiency increases revenue growth by 1.2 % at the 0.10 quantile, the effect is 0.4 % at the 0.90 quantile. Hence, two key aspects shall be considered in future studies of firm growth and performance: first, to use adequate indicators for performance which capture the entirety of the production process, and second, to consider the non-linearity of their relationship.

Suggested Citation

  • Brenes-Munoz, Thelma, 2015. "Testing the effect of firm performance on growth for the Chilean agribusiness," 2015 Conference, August 9-14, 2015, Milan, Italy 229063, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae15:229063
    DOI: 10.22004/ag.econ.229063
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    Keywords

    Agricultural and Food Policy; Research and Development/Tech Change/Emerging Technologies;

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