Institutions and Firms' Productivity: Evidence from Electricity Distribution in the EU |
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| Authors: | Elisa Borghi Chiara Del Bo Massimo Florio |
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| Institution: | 1. Department of Economics, Università Bocconi, Milano, Italy;2. Department of Economics, Management and Quantitative Methods, Universtià degli Studi di Milano, Milano, Italy;3. Department of Economics, Management and Quantitative Methods, Universtià degli Studi di Milano, Milano, ItalyThe authors thank the participants at the X Milan European Economy Workshop, 2011 for comments on an earlier version. Helpful suggestions by two anonymous referees are gratefully acknowledged. The usual disclaimer applies. |
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| Abstract: | Firms' productivity is influenced by internal and external institutions. Ownership is the core internal institutional feature of the firm, while the most important external institutional feature is the quality of government, which shapes the environment in which firms operate. We explore the relative role of these factors and their interaction in determining total factor productivity of electricity distribution firms in 16 EU countries. Using data from the Amadeus database of balance‐sheet information and from the Quality of Governance database, we find that when the quality of government is poor, public ownership is associated with lower productivity levels; however, public ownership is associated with higher productivity in countries characterized by higher quality of the institutional environment. |
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