ICC Advance Access originally published online on July 31, 2006
Industrial and Corporate Change 2006 15(4):683-714; doi:10.1093/icc/dtl015
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Corporate restructuring and labor productivity growth
Correspondence: Katariina Hakkala, The Research Institute of Industrial Economics, Box 5501, SE-11485 Stockholm, Sweden. e-mail: katariina.hakkala{at}industrialeconomics.se
This article analyzes corporate restructuring and its role in generating labor productivity growth in a sample of large Swedish manufacturing corporations. It is found that external restructuring, including ownership changes, start-ups, and closures of plants, accounted for up to 47% of the productivity growth of the sample of corporations during the 1986–1996 period. The results indicate that the productivity of large multi-plant corporations potentially grew at least twice as fast as that of single-plant firms with the same internal productivity growth, thanks to their organizational flexibility. Divestitures of low productive plants were found to play a particularly important role in the replacement process generating productivity growth. The effect of external restructuring on productivity is to some extent explained by a shift toward a more skill-intensive production.