Abstract
AbstractThis study investigates the impact of firm size and market concentration on firm productivity in Indonesian manufacturing. Firm size has been enduring interest in studies on firm productivity as the impact can be positive or negative. On the other hand, market concentration has increasingly been a key concern in evaluating firm productivity. This study used firm-level panel data of 6,783 manufacturing firms (47,481 observations) across 33 provinces of Indonesia. Two methods were applied in estimating the data; those methods were adjusted-autocorrelation OLS and random effect GLS. The results show that firm size has a significant positive effect on firm productivity, indicating that a large-scale firm experiences higher productivity than a small size firm. In addition, market concentration appears to have a negative impact on firm productivity, suggesting that a firm in a more concentrated industry tends to be less productive. The implication of this study suggests that a firm produces on a large scale and competes in a less concentrated market.
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