Spillovers, intangibles and productivity (D5.4)

The objective of this paper is to examine how spillovers and diffusion processes affect firm productivity growth. First, the paper examines the role of technological progress and diffusion processes in bridging or widening productivity gaps between firms at the technological frontier and less-productive firms. Second, the paper examines the impact of employee mobility on firm productivity and whether high levels of employee turnover are positively associated with productivity. Third, the paper examines the relation between firm productivity growth and growth in industry knowledge pools generated through domestic and international intangibles investments, and the role of firms’ own innovation capabilities. The analysis is conducted on linked employer-employee data and draws both on firm level and industry level measures of intangible assets developed and compiled as part of the GLOBALINTO project.

The paper finds that on average the productivity gap among Danish firms has diminished over the period examined in this study, however this overall trend is the product of a number of factors. First, catching up appears to be happen further away from the productivity frontier, potentially indicating that firms with lower productivity can gain more from the diffusion of new knowledge. Second, these effects are lowest in the years after the financial crisis, suggesting that there has been divergence in productivity The paper finds evidence of positive effects on productivity through inflows due to hiring of new knowledge intensive employees. Effects are strongest among R&D based staff compared to organizational or ICT based staff. Results concerning industry inflows of intangibles are mixed, making it difficult to draw any conclusions concerning the roles of these inflows both as knowledge spillovers and as indicators of strengthened industry competition. Most clear is the positive effect of organizational spillovers on firm productivity.

Read the paper here.