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Do Large Firms Generate Positive Productivity Spillovers?

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Abstract

Numerous studies have documented the rising dominance of large firms over the last few decades in many industrialized countries. Many research papers have focused on the potential negative effects of this increased market concentration, raising concerns about market power in both labor and product markets. In a new study, we investigate whether large firms also generate positive effects. Our research shows that large firms generate significant positive total factor productivity (TFP) spillovers to their domestic suppliers. To date, these types of spillovers have only been identified for multinational enterprises located in developing countries. Using firm-to-firm transaction data for an industrialized country, Belgium, we find that large domestic firms, as well as multinationals, generate positive TFP spillovers.

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  • Mary Amiti & Cédric Duprez & Jozef Konings & John Van Reenen, 2023. "Do Large Firms Generate Positive Productivity Spillovers?," Liberty Street Economics 20231012, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:97153
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    Keywords

    large firms; productivity; spillovers;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment

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