Firm’s Annual Labor Productivity Growth Determinants: Sub-Sahara Africa

Abdisalan Salad Warsame and Muse Bashir Dahir

International Business Research, 2024, vol. 17, issue 2, 15

Abstract: Understanding the determinants of company productivity and annual employee productivity growth is essential, especially for companies in sub-Saharan Africa. The existing literature has not differentiated the effects of skilled labor (permanent and temporary) in production from all skilled workers in the firm, which will have differential effects on annual labor productivity growth. Current literature also needs to empirically document the top management experience contributing to labor productivity growth. This paper explores the multifaceted aspects of labor productivity growth, focusing on the portion of skilled workers, years of the top manager's working experience in the firm's industry, a portion of permanent workers, and capital equipment, utilizing the micro-level data from the Enterprises Survey database (2006-2018). The findings identified the top manager's experience in the industry and permanent workers as the most significant yearly labor productivity growth contributors, followed by the firm's capital equipment. In contrast, the combination of skilled workers (temporary and permanent) in production has an insignificant relationship with annual labor productivity growth, implying that permanent workers' and top managers' experience matters in a firm's productivity growth.

Date: 2024
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