Determinants of total factor productivity: Evidence from US Compustat firms and Triadic Patent Families

Giovanis, Eleftherios and Ozdamar, O (2015) Determinants of total factor productivity: Evidence from US Compustat firms and Triadic Patent Families. International Journal of Economics and Business Research (IJEBR), 10 (3). pp. 258-272. ISSN 1756-9850

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Abstract

This study examines the determinants of total factor productivity (TFP) in US firms. Moreover, the firms' technology diversification and its effects on TFP is explored. This study uses the US Compustat database during the period 1976-2009. The overall results indicate that both firm and industry characteristics can be important factors for TFP. In addition, the determinants of TFP are examined during economic recession and economic growth periods. The results show the firms that their business activities are more related within similar technologies are able to report higher productivity, especially during economic recession periods. As such, firms can monitor productivity for strategic reasons such as corporate planning and organisation improvement. It can also be used for tactical reasons such as project control or controlling performance to budget.