The Missing Link: Technology, Investment, and Productivity

Power, Laura

doi:10.1162/003465398557393

Cited by 133 publications

(107 citation statements)

References 13 publications

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“…Power (1998) had already emphasized the difficulties related to identify an appropriate measure that would capture investment spikes: "Since an 'investment spike' is a theoretical rather than a numeric or algebraic concept, and lacks an unambiguous real-world analogue, there is some risk of measurement error, whichever definition of investment spike is employed." (p 303).…”

Section: Investment Lumpiness and Spike Measuresmentioning

confidence: 99%

“…The first three are taken from the literature, respectively from Cooper et al (1999), Power (1998) and Nilsen et al (2009). The last one is our own contribution to the identification of investment spike, and it allows to overcome some of the shortcomings of the other measures.…”

Section: Investment Lumpiness and Spike Measuresmentioning

confidence: 99%

“…A growing stream of literature has indeed started to investigate the relationship between capital adjustment episodes and firm level (performance) characteristics, such as productivity 4 and its growth rate (Power, 1998;Bessen, 1999;Huggett and Ospina, 2001;Nilsen et al, 2009;Shima, 2010), employment growth (Asphjell et al, 2010), sales growth (Licandro et al, 2004) or other factors of production (Sakellaris, 2004;Nilsen et al, 2009). In particular, investment should affect productivity in the long run, as new capital embodies the latest technology (Jensen et al, 2001).…”

Section: Introductionmentioning

confidence: 99%

“…"Learning by doing" models anticipate that it should take some time for workers to learn using the new technology, therefore after an investment episode labor productivity might follow a U shape curve, initially dropping and then gradually rising to a higher level. Most of the empirical literature on the subject (Power, 1998;Huggett and Ospina, 2001;Sakellaris, 2004;Shima, 2010) reports that the effect of investment spikes on productivity growth is indeed negative in the short run. If the initial cost has been uncovered by most of these studies, none of them report a positive relation between investment lumps and productivity growth, even in the long run.…”

Section: Introductionmentioning

confidence: 99%

“…If the initial cost has been uncovered by most of these studies, none of them report a positive relation between investment lumps and productivity growth, even in the long run. 5 The lack of a positive relation between investment in tangible assets and productivity growth has appeared robust enough that some authors, such as Power (1998), have also inferred policy implications from such findings: "I find little evidence of a robust, economically meaningful correlation between high productivity and high recent investment. This cautions against the efficacy of fiscal policy that is based on the premise that investment causes high productivity" (p. 311).…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

Dynamics of investment and firm performance: comparative evidence from manufacturing industries

2015

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If the relation between investment and economic growth is well established in the macroeconomic literature, the existence of a similar link at the level of the firm has been challenged by empirical work. This paper investigates the channels linking investment and firm performance in the French and Italian manufacturing industries. It does so by putting forth a novel methodology to identify investment spikes that corrects for size dependence. While maintaining the desired properties of a spike measure, our chosen proxy retrieves the expected relation between investment and firm performance. Ex-ante, more efficient and fast growing firms display a higher probability to invest; in turn, after an investment spike has taken place the group of investing firms shows further gains in performance. Finally, expansionary investment episodes, as proxied by the opening of new plants, have a negative effect on profitability while they are associated with higher sales and employment levels.JEL codes: C14, D22, D24, D92, E22, L11, L23, L60

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Section: Investment Lumpiness and Spike Measuresmentioning

confidence: 99%

Section: Investment Lumpiness and Spike Measuresmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Dynamics of investment and firm performance: comparative evidence from manufacturing industries

2015

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Food companies' productivity dynamics: Exploring the role of intangible assets

Nakatani

2023

Agribusiness

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Food insecurity has risen amid economic recovery from the COVID‐19 pandemic. Food companies' productivity dynamics can be driven by intangible assets, financing, economies of scale, lifecycle, and technological convergence. We confront this by studying productivity drivers for detailed food manufacturing industries using cross‐country firm‐level panel data. The results show that intangible assets nonlinearly and heterogeneously affect productivity growth, and countries with fewer product market regulations demonstrate higher productivity benefits from asset intangibility. Intangible assets do not play a major role for start‐up companies, while technological convergence drives productivity growth as they learn new technology in the food markets. Regarding the industrial differences, the bakery sector benefits the most from asset intangibility because of its brand images. Financing is particularly important for the meat/fish and dairy sectors, where capital equipment is necessary, and leverage effects are larger for countries with more access to financial institutions. Economies of scale are a vital productivity enhancer in the grain and starch sector for lowering fixed costs. Industrial policies to (i) raise the quality of intangible assets, (ii) promote financial access, and (iii) utilize scale economies are critical for improving the productivity of food manufacturers [EconLit Citations: D24, G32, L66, O34].

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What do U.S. biopharmaceutical companies get from patents and research and development spikes for their dynamic corporate performance?

Wang

Kweh

et al. 2020

Manage Decis Econ

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This paper investigates how patents and research and development (R&D)spikes affect the corporate performance of 863 firm-year observations of U.S. biopharmaceutical companies. First, a dynamic data envelopment analysis model is adopted to evaluate the performance of the U.S. biopharmaceutical companies.Then, ordinary least squares regression is used to explore the effects of three patent-related variables (patent counts, citations, and claims) and R&D spikes on corporate performance. This study finds positive impacts of patent counts, citations, and claims on corporate performance. In addition, the results show that R&D spikes have negative contemporaneous effects and time-lagged effects on corporate performance.

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The Missing Link: Technology, Investment, and Productivity

Cited by 133 publications

References 13 publications

Dynamics of investment and firm performance: comparative evidence from manufacturing industries

Dynamics of investment and firm performance: comparative evidence from manufacturing industries

Food companies' productivity dynamics: Exploring the role of intangible assets

What do U.S. biopharmaceutical companies get from patents and research and development spikes for their dynamic corporate performance?

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