Skip to main content

Advertisement

SpringerLink
Log in

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

  • Original paper
  • Published:
Operational Research Aims and scope Submit manuscript

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 − 0.4%, 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.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1

Source: Elaboration based on Oude Lansink et al. (2015)

Similar content being viewed by others

Notes

  1. The term ‘globalization’ can be considered here as the increase in a firm’s participation in the world markets, and the increase in the interdependence of firms and the world markets.

  2. Bernard et al. (2009a, b) refer to related-party transactions (or intra-firm trade) as trade between U.S. companies and their foreign subsidiaries, and trade between U.S. subsidiaries of foreign companies and their foreign affiliates. The related-party definition changes based on imports and exports. For exports, firms are related if either party owns, directly or indirectly, 10% or more of the other party. For imports, firms are related if either owns, controls, or holds voting power equivalent to 6% of the outstanding voting stock or shares of the other organization All firms that have related-party transactions (export, import, or both) as “multinationals” or related-party firms.

  3. In this paper, we focused on the combined food (NAICS 311), beverage, and tobacco products manufacturing (NAICS 312) industries because of the similarities and nature of products that are produced by these two industries. Similarly, in some government statistical accounts (such as Bureau of Economic Analysis’s input–output accounts), combined industry consideration is common for food and beverage industries.

  4. The Conference Board (2017) reports that 26,240 new food and beverage products were introduced in 2010, compared to 26,244 non-food consumer packaged good product innovations. The current pattern of new product introductions reflects a greater degree of intensity over time where new food production introductions in the 1990s averaged approximately 10,000 per year.

  5. Dynamic directional distance function extends the static directional distance function of Chambers et al. (1996a, b, 1998), which has its antecedents in a shortage function introduced by Luenberger (1992, 1995).

  6. In selecting global firms in the ORBIS database, as an alternative definition, we tried a multinational firm definition, which is the case when the firm’s share in a foreign firm is greater than or equal to 10.01%; however, only four additional firms entered our pool of firms compared to the one with the GUO definition. Thus, we kept the original GUO definition in selecting globally engaged.

  7. All price indices included in NBER-CES Manufacturing Industry Database are Tornqvist-type indices.

  8. In the NBER-CES Manufacturing Industry database there were no price indices available that directly reflect the change of prices in costs of goods sold. The only related indices with costs of goods sold were these of the price index for total costs of materials and the price index for energy. Hence, we used these, and further aggregated them in an overall index. To aggregate these indices, we used a simple average since, for example, the data on weights that could reflect the shares of materials and energy inputs were not available.

  9. The U.S. Department of Commence industry report is a good source to understand the details about these recent trends in the industry.

  10. However, to gain greater insight into this implication, a further investigation into the types of globalization structure of these firms (e.g., outward FDI, inward FDI, import, and export) and their experiences (e.g., technology transfers, information sharing, and managerial and organizational changes) during the globalization process is necessary.

  11. This test consists in the extension of the nonparametric test of the equality of two densities developed by Li (1996).

References

  • Abel AB, Bernanke B, Croushore D (2013) Macroeconomics, 9th edn. Perarson, Upper Saddle River

    Google Scholar 

  • Aggarwal R, Berrill J, Hutson E, Kearney C (2011) What is a multinational corporation? Classifying the degree of firm-level multinationality. Int Bus Rev 20:557–577

    Google Scholar 

  • Amiti N, Konnings J (2007) Trade liberalization, intermediate inputs and productivity: evidence from Indonesia. Am Econ Rev 97:1611–1638

    Google Scholar 

  • Aparicio J, Pastor JT, Zofío JL (2017) Can Farrell’s allocative efficiency be generalized by the directional distance function approach? Eur J Oper Res 257:345–351

    Google Scholar 

  • Autant-Bernard C, Guironnet JP, Massard N (2011) Agglomeration and social return to R&D: evidence from French plant productivity changes. Int J Prod Econ 132:34–42

    Google Scholar 

  • Bernard AB, Jensen JB (1999) Exceptional exporter performance: cause, effect, or both? J Int Econ 47(1):1–25

    Google Scholar 

  • Bernard AB, Jensen JB (2004) Exporting and productivity in the USA. Oxf Rev Econ Policy 20(3):343–357

    Google Scholar 

  • Bernard AB, Eaton J, Jensen JB, Kortum S (2003) Plants and productivity in international trade. Am Econ Rev 93(4):1268–1290

    Google Scholar 

  • Bernard AB, Redding SJ, Schott PK (2005) Multiproduct firms and the dynamics of product mix. Yale University, School of Management, New Haven

    Google Scholar 

  • Bernard AB, Redding SJ, Schott PK (2006) Survival of the best fit: exposure to low-wage countries and the (uneven) growth of U.S. manufacturing plants. J Int Econ 68(1):219–237

    Google Scholar 

  • Bernard AB, Jensen JB, Redding SJ, Schott PK (2007a) Firms in international trade. J Econ Perspect 21(3):105–130

    Google Scholar 

  • Bernard AB, Redding SJ, Schott PK (2007b) Comparative advantage and heterogeneous firms. Rev Econ Stud 74(1):31–66

    Google Scholar 

  • Bernard AB, Jensen JB, Schott PK (2009a) Importers, exporters, and multinationals: a portrait of firms in the U.S. that trade goods. In: Dunne T, Jensen B, Roberts MJ (eds) Producer dynamics: new evidence from micro data. University of Chicago Press, Chicago, pp 513–552

    Google Scholar 

  • Bernard AB, Redding SJ, Schott PK (2009b) Products and productivity. Scand J Econ 111(4):681–709

    Google Scholar 

  • Bernard AB, Redding SJ, Schott PK (2010) Multiple-product firms and product switching. Am Econ Rev 100(1):70–97

    Google Scholar 

  • Bernard AB, Jensen JB, Redding SJ, Schott PK (2012) The empirics of firm heterogeneity and international trade. Annu Rev Econ 4:283–313

    Google Scholar 

  • Bernard AB, Jensen JB, Redding SJ, Schott PK (2018) Global firms. J Econ Lit 56(2):565–619

    Google Scholar 

  • Bloom N, Draca M, Reenen J (2016) Trade induced technical change? The impact of Chinese imports on innovation, IT, and productivity. Rev Econ Stud 83:87–117

    Google Scholar 

  • Bontemps C, Nauges C, Réquillart V, Simioni N (2012) Food safety regulation and firm productivity: evidence from the French food industry. IDEI working papers. http://www.idei.fr/doc/by/requillart/foodsafety.pdf. Accessed 15 October 2018

  • Boussemart J-P, Briec W, Kerstens K, Poutineau J-C (2003) Luenberger and Malmquist productivity indices: theoretical comparisons and empirical illustration. Bull Econ Res 55(4):391–405

    Google Scholar 

  • Brambilla I (2009) Multinationals, technology, and the introduction of varieties of goods. J Int Econ 79(1):89–101

    Google Scholar 

  • Brechling F (1975) Investment and employment decisions. Manchester University Press, Manchester

    Google Scholar 

  • Castellani D, Serti F, Tomas C (2010) Firms in international trade: importers’ and exporters’ heterogeneity in Italian manufacturing industry. World Econ 33:424–457

    Google Scholar 

  • Caves R (1996) Multinational enterprise and economic analysis. Cambridge University Press, London

    Google Scholar 

  • Caves DW, Christensen LR, Diewert WE (1982) The economic theory of index numbers and the measurement of input, output, and productivity. Econometrica 50(6):1393–1414

    Google Scholar 

  • Chambers RG, Pope RD (1996) Aggregate productivity measures. Am J Agric Econ 78(5):1360–1365

    Google Scholar 

  • Chambers RG, Färe R, Grosskopf S (1996a) Productivity growth in APEC countries. Pac Econ Rev 1:181–190

    Google Scholar 

  • Chambers RG, Chung Y, Färe R (1996b) Benefit and distance functions. J Econ Theory 70(2):407–419

    Google Scholar 

  • Chambers RG, Chung Y, Färe R (1998) Profit, directional distance functions, and Nerlovian efficiency. J Optim Theory Appl 98:351–364

    Google Scholar 

  • Clerides S, Lach S, Tybout J (1998) Is learning-by exporting important? Micro dynamic evidence from Colombia, Mexico, and Morocco. Q J Econ 53:903–947

    Google Scholar 

  • Cooper R, Haltiwanger JC, Power L (1999) Machine replacement and the business cycle: lumps and bumps. Am Econ Rev 89(4):921–946

    Google Scholar 

  • Criscuolo C, Haskel J, Slaughter MJ (2008) Global engagement and the innovation activities of the firm. Int J Ind Organ 28(2):191–202

    Google Scholar 

  • De Loecker J (2007) Do exports generate higher productivity? Evidence from Slovenia. J Int Econ 73(1):69–98

    Google Scholar 

  • De Loecker J (2011) Product differentiation, multiproduct firms, and estimating the impact of trade liberalization on productivity. Econometrica 79(5):1407–1451

    Google Scholar 

  • Delgado M, Fariñas JC, Ruano S (2002) Firm productivity and export markets: a non-parametric approach. J Int Econ 57:397–422

    Google Scholar 

  • Doms M, Jensen JB (1998) Comparing wages, skills, and productivity between domestically and foreign-owned manufacturing establishments in the United States. In: Baldwin RE, Lipsey RE, Richardson JD (eds) Geography and ownership as bases for economic accounting. University of Chicago Press, Chicago, pp 235–258

    Google Scholar 

  • Gardijan M, Lukač Z (2018) Measuring the relative efficiency of the food and drink industry in the chosen EU countries using the data envelopment analysis with missing data. CEJOR 26:695–713

    Google Scholar 

  • Geylani CP, Stefanou SE (2013) Linking investment spikes and productivity growth. Empir Econ 45(1):157–178

    Google Scholar 

  • Greenaway D, Kneller R (2007) Firm heterogeneity, exporting and foreign direct investment. Econ J 117(517):134–161

    Google Scholar 

  • Harris JM (2002) Food manufacturing. AER-811. United States Department of Agriculture, Washington, DC

    Google Scholar 

  • Hayakawa K, Machikita T (2012) Globalization and productivity: a survey of firm-level analysis. J Econ Surv 26(2):332–350

    Google Scholar 

  • Helpman E, Melitz M, Yeaple S (2004) Export versus FDI with heterogeneous firms. Am Econ Rev 94(1):300–316

    Google Scholar 

  • Kapelko M (2017) Measuring productivity change accounting for adjustment costs: evidence from the food industry in the European Union. Ann Oper Res. https://doi.org/10.1007/s10479-017-2497-0

    Article  Google Scholar 

  • Kapelko M, Oude Lansink A, Stefanou SE (2014) Assessing dynamic inefficiency of the Spanish construction sector pre- and post-financial crisis. Eur J Oper Res 237(1):349–357

    Google Scholar 

  • Kapelko M, Oude Lansink A, Stefanou SE (2015a) Effect of food regulation on the Spanish food processing industry. PLoS ONE 10(6):e0128217. https://doi.org/10.1371/journal.pone.0128217

    Article  Google Scholar 

  • Kapelko M, Oude Lansink A, Stefanou SE (2015b) Analyzing the impact of investment spikes on dynamic productivity growth. OMEGA Int J Manag Sci 54:116–124

    Google Scholar 

  • Kapelko M, Oude Lansink A, Stefanou S (2016) Investment age and dynamic productivity growth in the Spanish food processing industry. Am J Agric Econ 98:946–961

    Google Scholar 

  • Kapelko M, Oude Lansink A, Stefanou SE (2017a) The impact of the 2008 economic crisis on dynamic productivity growth of the Spanish food manufacturing industry. An impulse response analysis. Agric Econ 48(5):561–571

    Google Scholar 

  • Kapelko M, Oude Lansink A, Stefanou SE (2017b) Assessing the impact of changing economic environment on productivity growth: the case of the Spanish dairy processing industry. J Food Prod Mark 23:384–397

    Google Scholar 

  • Luenberger DG (1992) New optimality principles for economic efficiency and equilibrium. J Optim Theory Appl 75(2):221–264

    Google Scholar 

  • Luenberger DG (1995) Microeconomic theory. McGraw-Hill, New York

    Google Scholar 

  • Luh YH, Stefanou SE (1991) Productivity growth in U.S. agriculture under dynamic adjustment. Am J Agric Econ 73:1116–1125

    Google Scholar 

  • Mahlberg B, Sahoo BK (2011) Radial and non-radial decompositions of Luenberger productivity indicator with an illustrative application. Int J Prod Econ 131:721–726

    Google Scholar 

  • Markusen JR (2002) Multinational firms and the theory of international trade. MIT Press, Cambridge

    Google Scholar 

  • Melitz MJ (2003) The impact of trade on intra-industry reallocations and aggregate industry productivity. Econometrica 71(6):1695–1725

    Google Scholar 

  • Melitz MJ, Redding SJ (2014) Heterogeneous firms and trade. In: Helpman E, Gopinath G, Rogo K (eds) Handbook of international economics, vol 4. Elsevier, North Holland, p 154

    Google Scholar 

  • Melitz MJ, Trefler D (2015) Gains from trade when firms matter. J Econ Perspect 26(2):91–118

    Google Scholar 

  • Morrison Paul CJ (1999) Cost structure and the measurement of economic performance. Kluwer Academic Press, Boston

    Google Scholar 

  • Muûls M, Pisu M (2009) Imports and exports at the level of the firm: evidence from Belgium. World Econ 32:692–734

    Google Scholar 

  • Noonan R (2012) Made in America: food, beverages, and tobacco products. Department of Commerce, Economics and Statistics Administration, Washington, DC

    Google Scholar 

  • Okrent AM, Alston JM (2012) The demand for disaggregated food-away-from-home and food-at-home products in the United States. United States Department of Agriculture, Economic Research Service, Washington, DC

    Google Scholar 

  • Okrent AM, Elitzak H, Park T, Rehkamp S (2018) Measuring the value of the U.S. food system: revisions to the food expenditure series. U.S. Department of Agriculture, Economic Research Service, Washington, DC

    Google Scholar 

  • Oude Lansink A, Stefanou SE, Serra T (2015) Primal and dual dynamic Luenberger productivity indicators. Eur J Oper Res 241:555–563

    Google Scholar 

  • Pavcnik N (2002) Trade liberalization, exit, productivity improvements: evidence from Chilean plants. Rev Econ Stud 69:245–276

    Google Scholar 

  • Power L (1998) The missing link: technology, investment, and productivity. Rev Econ Stat 80(2):300–313

    Google Scholar 

  • Redding SJ (2011) Theories of heterogeneous firms and trade. Annu Rev Econ 3:77–105

    Google Scholar 

  • Serti F, Tomasi C (2008) Self-selection and post-entry effects of exports: evidence from Italian manufacturing firms. Rev World Econ 144:660–694

    Google Scholar 

  • Silva E, Stefanou SE (2003) Nonparametric dynamic production analysis and the theory of cost. J Prod Anal 19:5–32

    Google Scholar 

  • Silva E, Oude Lansink A, Stefanou SE (2015) The adjustment-cost model of the firm: duality and productive efficiency. Int J Prod Econ 168:245–256

    Google Scholar 

  • Simar L, Zelenyuk V (2006) On testing equality of distributions of technical efficiency scores. Econ Rev 25:497–522

    Google Scholar 

  • Stefanou SE (1989) Returns to scale in the long run: the dynamic theory of cost. South Econ J 55:570–579

    Google Scholar 

  • The Conference Board (2017) Economic contribution of the food and beverage industry. The Conference Board, New York

    Google Scholar 

  • Van Biesebroeck J (2005) Exporting raises productivity in sub-Saharan African manufacturing firms. J Int Econ 67(2):373–391

    Google Scholar 

  • Verschelde M, Dumont M, Rayp G, Merlevede B (2016) Semiparametric stochastic metafrontier efficiency of European manufacturing firms. J Prod Anal 45(1):53–69

    Google Scholar 

  • Vlontzos G, Theodoridis A (2013) Efficiency and productivity change in the Greek dairy industry. Agric Econ Rev 14:14–28

    Google Scholar 

  • Vogel A, Wagner J (2010) Higher productivity in importing German manufacturing firms: self-selection, learning from importing, or both? Rev World Econ 145:641

    Google Scholar 

  • Wagner J (2007) Exports and productivity: a survey of the evidence from firm-level data. World Econ 30(1):60–82

    Google Scholar 

  • You T, Zi H (2007) The economic crisis and efficiency change: evidence from the Korean construction industry. Appl Econ 39:1833–1842

    Google Scholar 

  • Zofío JL, Lovell CAK (2001) Graph efficiency and productivity measures: an application to U.S. agriculture. Appl Econ 33(11):1433–1442

    Google Scholar 

Download references

Acknowledgements

This research was partially supported by a grant from the U.S. Department of Agriculture, Economics Research Service agreement No. 58-3000-7-0015. The calculations of adapted Li test were made at the Wroclaw Centre for Networking and Supercomputing (www.wcss.wroc.pl), Grant No. 286.

Author information

Authors and Affiliations

  1. Palumbo-Donahue School of Business, Duquesne University, Pittsburgh, PA, USA

    Pinar Celikkol Geylani

  2. Department of Logistics, Institute of Applied Mathematics, Wroclaw University of Economics, Wrocław, Poland

    Magdalena Kapelko

  3. Food and Resource Economics Department, University of Florida, U.S.A., and Business Economics Group, Wageningen University, Wageningen, The Netherlands

    Spiro E. Stefanou

Authors
  1. Pinar Celikkol Geylani
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Magdalena Kapelko
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Spiro E. Stefanou
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Pinar Celikkol Geylani.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Appendix

Appendix

See Tables 4 and 5.

Table 4 Dynamic technical and scale inefficiencies for firms in the U.S. food and beverage manufacturing industries
Full size table
Table 5 Test results for differences dynamic inefficiency measures for global and non-global firms in the U.S. food and beverage manufacturing industries
Full size table

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Geylani, P.C., Kapelko, M. & Stefanou, S.E. Dynamic productivity change differences between global and non-global firms: a firm-level application to the U.S. food and beverage industries. Oper Res Int J 21, 901–923 (2021). https://doi.org/10.1007/s12351-019-00489-x

Download citation

  • Received:

  • Revised:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s12351-019-00489-x

Keywords

Search

Navigation