The sources of heterogeneity in firm performance: lessons from Italy1

Fabio Landini, Alessandro Arrighetti and Eleonora Bartoloni

Cambridge Journal of Economics, 2020, vol. 44, issue 3, 527-558

Abstract: An extensive body of literature documents large and persistent within-industry heterogeneity of firm performance. While some authors explain such evidence in terms of input misallocation, we provide an alternative analytical framework that integrates insights from resource-based and institutional approaches. We interpret firms’ behaviour as the result of the interaction among exogenous and endogenous factors. Exogenous factors, both supply and demand related, define the opportunity set that is available to firms. Endogenous factors reflect instead firm-specific interpretations of such set, which, combined with the available resources and capabilities, determine a firm’s strategic responses, which can be markedly heterogeneous. Whenever the diversity of firm conducts is associated with relatively small profit differentials, firm heterogeneity can persist. Evidence based on the evolution of labour productivity and profit dispersion in the Italian manufacturing sector between the 1990s and early 2000s provides support for our interpretative framework.

Keywords: Firm heterogeneity; Productivity; Profit; Misallocation; Capabilities; Italy (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://hdl.handle.net/10.1093/cje/beaa001 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:cambje:v:44:y:2020:i:3:p:527-558.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

Cambridge Journal of Economics is currently edited by Jacqui Lagrue

More articles in Cambridge Journal of Economics from Cambridge Political Economy Society Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Bibliographic data for series maintained by Oxford University Press ().