Organizational Form and Trade Liberalization: Plant-Level Evidence

John (Jianqiu) Bai ()
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John (Jianqiu) Bai: D’Amore-McKim School of Business, Northeastern University, Boston, Massachusetts 02115

Management Science, 2021, vol. 67, issue 12, 7755-7784

Abstract: This paper studies how firms’ internal organization shapes the impact of international trade. Using establishment-level data from the U.S. Census and a difference-in-difference specification, I find that, relative to standalone firms, conglomerates are more likely to restructure after trade liberalization episodes, focusing on their core competency and improving firm productivity and product market performance. Adjustments through the extensive margin account for the majority of the productivity growth differential between conglomerates and standalones experiencing trade shocks. Aggregate industry productivity remains relatively unchanged in industries dominated by conglomerates’ core business but decreases significantly in others. My findings suggest that firms’ internal organization has important consequences on the effects of trade policies.

Keywords: firm organization; corporate restructuring; trade; aggregate productivity (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:67:y:2021:i:12:p:7755-7784

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