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ICC Advance Access originally published online on July 18, 2008
Industrial and Corporate Change 2008 17(4):711-751; doi:10.1093/icc/dtn027
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© The Author 2008. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved.

This article appears in the following Industrial and Corporate Change issue: Special Issue: Schumpeterian Themes on Industrial Evolution, Structural Change and their Microfoundations [View the issue table of contents]

Productivity, profitability and financial performance

Giulio Bottazzi, Angelo Secchi and Federico Tamagni

Correspondence: Giulio Bottazzi, LEM, Scuola Superiore Sant'Anna, Piazza Martiri della Liberta' 33, 56127, Pisa, Italy. e-mail: bottazzi{at}sssup.it

Correspondence: Angelo Secchi, DSE, University of Pisa, Via Serafini 3, 56126, Pisa, Italy. e-mail: angelo.secchi{at}sp.unipi.it

Correspondence: Federico Tamagni, LEM, Scuola Superiore Sant'Anna, Piazza Martiri della Liberta' 33, 56127, Pisa, Italy. e-mail: federico.tamagni{at}sssup.it

This work presents a comparative analysis of two crucial dimensions of firms’ performance: profitability and productivity. The characteristics of their empirical distribution and the associated degree of persistence over time are explored through a set of parametric and non-parametric exercises performed on an exhaustive panel of Italian firms, active in both manufacturing and services, during the period 1998–2003. The main strength of our analysis resides in the use of a credit rating index which allows us to document not obvious interactions which are in place among economic performances, financial conditions and access to external credit. We also investigate how profitability and productivity relates with a third important dimension of performance, that is growth. We find that, independently from the particular sector of activity and from financial conditions, there seems to be weak market pressure and little behavioral inclination for the more efficient and more profitable firms to grow faster.


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