Corporate restructuring and labor productivity growth

This article analyzes corporate restructuring and its role in generating labor productivity growth in a sample of large Swedish manufacturing corporations. It is found that external restructuring, including ownership changes, start-ups, and closures of plants, accounted for up to 47% of the productivity growth of the sample of corporations during the 1986--1996 period. The results indicate that the productivity of large multi-plant corporations potentially grew at least twice as fast as that of single-plant firms with the same internal productivity growth, thanks to their organizational flexibility. Divestitures of low productive plants were found to play a particularly important role in the replacement process generating productivity growth. The effect of external restructuring on productivity is to some extent explained by a shift toward a more skill-intensive production. Copyright 2006, Oxford University Press.