Explaining Total Factor Productivity at Firm Level in Italy: Does Location Matter?

Francesco Aiello (), Valeria Pupo () and Fernanda Ricotta

Spatial Economic Analysis, 2014, vol. 9, issue 1, 51-70

Abstract: This study analyses how firms' internal variables and regional factors affect total factor productivity (TFP) of Italian manufacturing firms. Due to the hierarchical structure of our data, we employ a multilevel model that allows for a clear distinction between firm and region-specific effects. Results refer to 2004-2006 and show, as expected, the importance of firm-specific determinants of TFP. At the same time, they indicate that location matters in the sense that the context where firms operate plays a crucial role in determining the level of TFP. In more detail, we find that the regional endowment of infrastructure, the efficiency of local administration and the investments in R&D exert a positive effect on firms' performance.

Date: 2014
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DOI: 10.1080/17421772.2013.863428

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