Firm Characteristics and Total Factor Productivity: Evidence from Indian Manufacturing Firms

Lopamudra D. Satpathy, Bani Chatterjee and Jitendra Mahakud
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Lopamudra D. Satpathy: Lopamudra D. Satpathy is Senior Research Scholar, Department of Humanities and Social Sciences, Indian Institute of Technology, Kharagpur, West Bengal 721302, India, email: satpathy.lopa@gmail.com
Bani Chatterjee: Bani Chatterjee is Professor, Department of Humanities and Social Sciences, Indian Institute of Technology, Kharagpur, West Bengal 721302, India, email: bani@hss.iitkgp.ernet.in
Jitendra Mahakud: Jitendra Mahakud is Associate Professor, Department of Humanities and Social Sciences, Indian Institute of Technology, Kharagpur, West Bengal 721302, India, email: jmahakud@hss.iitkgp.ernet.in

Margin: The Journal of Applied Economic Research, 2017, vol. 11, issue 1, 77-98

Abstract: Measurement of the productivity of firms is an important research issue in productivity literature. Over the years, various methods have been developed to measure firm productivity across the globe. But there is no unanimity on the use of methods, and research on the identification of factors which determine productivity has been neglected. In view of these gaps, this study aims to measure total factor productivity (TFP) and tries to identify firm-specific factors which determine productivity of Indian manufacturing companies. The study is based on data of 616 firms from 1998–99 to 2012–13. To measure TFP, the Levinsohn–Petrin (L-P) method has been employed, and the fully modified ordinary least squares (FMOLS) method has been used to identify factors that affect TFP. The results reveal that embodied and disembodied technology plays a crucial role in the determination of productivity overall in manufacturing and other sub-industries. Similarly, the size of firms and intensity of raw material imports are also important for the determination of productivity across the sub-industries. JEL Classification: C14, C33, D24, L60

Keywords: Total Factor Productivity; Manufacturing Companies; Levinsohn–Petrin Method; Fully Modified Ordinary Least Squares; Embodied and Disembodied Technology (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:sae:mareco:v:11:y:2017:i:1:p:77-98

DOI: 10.1177/0973801016676013

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