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The analysis of a productivity disparity by a size of businesses and its solutions

Author Kim, Wonkyu Date 2017.02.27 Issue No 09
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A disparity of Total Factor Productivity (TFP) among large companies and SMEs has continuously been widened since the 2000s. Then, it has been narrowed since the 2010s due to poor productivity of large companies, especially businesses with more than 500 employees.

●Since the 2010s, a disparity of TFP among large companies and SMEs has dwindled somewhat, but TFP of SMEs was merely 63.6% compared to that of large companies (in 2014).

 

As a result of the estimation, a widened gap of TFP among large companies and SMEs in the mining and manufacturing industry had negative impacts on the increase rate of TFP in the overall mining and manufacturing industry.

●The increase rate of TFP of large companies has positive impacts on that of SMEs. In terms of productivity, however, SMEs have not caught up with large companies.

 

In order to enhance productivity in the overall economy, it is necessary to establish policies to narrow a gap of productivity among large companies and SMEs and to improve large companies’ productivity.

●In order to improve large companies’ productivity, it is necessary to have restructuring of large companies in the major industries, support business reorganization, avoid from stepping up regulations of large companies, and enhance incentive systems for the participation by large companies, regarding a creation of new industries.

● In order to improve SMEs’ productivity, it is necessary to focus on innovation of production processes of SMEs, invigoration of innovative start-ups, supports for growth of innovative businesses via restructuring of SMEs, increased innovation, expansion of smart factory supplies , etc.