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A Study on the Impact of Technological Progress upon the Productivity Divergence among Firms: Focusing on the Comparison between Large and Middle & Small Firms, and among the Different Sizes of Firms
[Abstract]
This paper empirically analyzes the impact of technological progress on the productivity divergence between large and middle & small firms and among the different sizes of firms, paying attention to the impact of the productivity gap between firms on socio-economic problems and explores the corresponding policies for that problems. The empirical results are summarized as follows. First, technological progress widens the productivity gap between large firms(firms with the top 85% or more of the firm size) and small & middle firms(firms with less than 85% of the firm size). Second, the productivity gap due to technological progress widens in proportion to the scales of firms, thus the largest increase in productivity occurs for large firms. Third, the impact of technological progress on the productivity gap between firms is not much different qualitatively between the manufacturing and service industries, but quantitatively, the manufacturing industry is larger than the service industry. Fourth, among the control variables, the capital equipment ratio of labor and the quality of labor widen the productivity gap between firms, and the larger the size, the larger the productivity gap appears. The strengthening market dominance problem for large firms and the resulting decline in aggregate productivity from technological progress is solved by regulations through competition policies and policies that increase market competition such as mission-oriented R&D policies. In addition, the problem of increasing the possibility of small firms¡¯ exit from technological progress can be solved by the government support if small firms are venture companies with technological potential.