Productivity growth in SMEs and large firms
Firm-level performance depends on a variety of factors, including the size of the enterprise and its sector of activity. While larger firms tend to be more productive than smaller ones, productivity growth in smaller firms may be spurred by the intensive use of information and communication technologies (ICT), digital tools, and new innovations particularly in new or younger firms.
Labour productivity growth in SMEs and large firms varies significantly across countries and sectors. Although there have been growing concerns of winner-take all dynamics of larger firms, and a slowdown in the diffusion of productivity from frontier firms, this is not universally true. In many economies, post-crisis labour productivity growth in SMEs in manufacturing, construction, wholesale and retail trade, and professional, scientific and technical activities has outpaced that in large firms.
Definition
Labour productivity by enterprise size class is measured as gross value added in current prices per person employed, divided by the industry deflator sourced from the OECD National Accounts Statistics (database). Labour input is measured as total employment, which includes employees and all other paid or unpaid persons who worked for the concerned unit during the reference year. Data on hours worked by all persons employed are typically not available by industry and enterprise size class.
Comparability
Value added estimates for different enterprise size classes are based on OECD Structural and Demographic Business Statistics (database) and will typically not align with estimates in national accounts. The latter include a number of adjustments to reflect businesses and activities that may not be covered in structural business statistics, such as those made to reflect the non-observed economy. In the absence of gross value added deflators by firm size class, deflators for gross value added in each industry are necessarily assumed to be equal across firm size classes and might affect the comparability across firms, industries and countries.
Since labour input is measured as total employment, comparability of labour productivity measures by size class may be affected by differences in the share of part-time employment. In addition, productivity differences in main aggregate sectors could mask different productivity patterns in more narrowly defined industries. This may in turn reflect differences in the value of goods and services produced, as well as different intensities in the use of knowledge-based capital.
Because the estimates presented here are not based on a fixed cohort of firms, estimates of productivity growth by firm size may be biased. SMEs exhibiting higher productivity growth at the start of the period are also more likely to become larger enterprises while low productivity large enterprises are more likely to contract and become SMEs.
References
OECD National Accounts Statistics (database), https://doi.org/10.1787/na-data-en.
OECD Productivity Statistics (database), https://doi.org/10.1787/pdtvy-data-en.
OECD Structural and Demographic Business Statistics (database), https://doi.org/10.1787/sdbs-data-en.
OECD (2017), Entrepreneurship at a Glance 2017, OECD Publishing, Paris. https://doi.org/10.1787/entrepreneur_aag-2017-en.
