Dynamic productivity change differences between global and non-global firms: a firm-level application to the U.S. food and beverage industries

Abstract

This study employs the dynamic Luenberger productivity change indicator and its components (i.e., technical change, technical inefficiency change, and scale inefficiency change) to analyze the productivity differences between global and non-global firms in U.S. food and beverage manufacturing industries during the period 2004–2009. Overall, an average dynamic productivity change for both global and non-global firms is negative, with −\u20090.4%, although there is heterogeneity in the magnitudes of the growth rates across both groups of firms. The productivity change differences come from the technological regress for non-global firms in spite of the technological progress experienced by global firms. The study finds that while the global firms experience moderate dynamic technical efficiency loss, the contribution of dynamic technical inefficiency to productivity change for non-global firms is positive. Further, the negative contribution of dynamic scale inefficiency change to dynamic productivity change is apparent for both global and non-global firms over the course of this study. These results emphasize the importance of productivity change components for firm managers in designing strategies aimed at improving the firm’s productivity and for policy makers in designing clever trade policies to be competitive in both domestic and international markets.