Technical efficiency and productivity growth of entrant firms in the retail sector in Spain

Abstract

This paper analyses efficiency and productivity growth in relation to size, and age and for both entrant and incumbent firms using a birth cohort approach for the period 1995–2003 for two sectors, non-specialized shop (521) and specialized shop (524) three-digit NACE. On the one hand, our results indicate the existence of statistically significant differences among entrant and incumbent firms by size. Also, we found differences according to the start up size in relation to membership of the birth cohort and activity sectors. On the other hand, productivity growth shows that, in general, the larger entrants in the non-specialized sector obtained higher productivity than did small firms. This phenomenon was not observed in the specialized sector, where firms worsened in productivity in most of the cohorts and we did not find significant differences in productivity growth between large and small firms. Efficiency changes tend to be a positive contributor to total factor productivity change, but technical change tends to be a negative contributor for both sectors. A deeper analysis of the efficiency changes (catching up) has shown that these improvements are generally attributed to pure technical efficiency and the scale.