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Institutions and Firms' Productivity: Evidence from Electricity Distribution in the EU
Author(s) -
Borghi Elisa,
Del Bo Chiara,
Florio Massimo
Publication year - 2016
Publication title -
oxford bulletin of economics and statistics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.131
H-Index - 73
eISSN - 1468-0084
pISSN - 0305-9049
DOI - 10.1111/obes.12087
Subject(s) - productivity , business , total factor productivity , quality (philosophy) , corporate governance , distribution (mathematics) , government (linguistics) , electricity , industrial organization , balance sheet , economics , finance , economic growth , mathematical analysis , philosophy , linguistics , mathematics , engineering , epistemology , electrical engineering
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.