Organizational Form and Trade Liberalization: Plant-Level Evidence
62 Pages Posted: 13 Dec 2015 Last revised: 10 Mar 2019
Date Written: March 02, 2019
This paper studies how firms' internal organization shapes the impact of international trade. Using establishment level data from the U.S. Census and a difference-in-difference specification, I find that relative to standalone firms, conglomerates are more likely to restructure after trade liberalization episodes, focusing on their core competency, improving firm productivity and product market performance. Adjustments through the extensive margin account for 77% of the productivity growth differential between conglomerates and standalones experiencing trade shocks. Aggregate industry productivity remains relatively unchanged in industries dominated by conglomerates' core business but decreases significantly in others. My findings suggest that firms' internal organization has important consequences on the effects of trade policies.
Keywords: Firm Organization, Corporate Restructuring, Trade, Aggregate Productivity
JEL Classification: G34, F14, L20, O40
Suggested Citation: Suggested Citation