Organizing Knowledge to Compete: Impacts of Capacity Building Programs on Firm Organization

Abstract

The relationship between the organization of rms and their performance has been at the center of recent literature focusing on heterogeneous productivity, access to foreign markets and wage inequality. At the same time, there is now some empirical evidence on the eectiveness of training programs to promote best management practices. This paper analyzes the eects of a capacitybuilding program on rms’ organization. The Peiex program focuses on enhancing Brazilian SMEs’ competitiveness by providing coaching and consulting on best management and production practices for more than 5,000 rms. We use a unique rm-level dataset covering the full manufacturing sector in Brazil. In order to identify the eect of the program, we rely on an instrumental variable approach and exploit a quasi-experiment provided by a regional time variation for its implementation. We nd a positive impact of the program on rms’ production hierarchy based on knowledge. We use these results to discuss how changes on rms’ organization may interact with rms’ export performance.