Organizational Form and Trade Liberalization: Plant-Level Evidence

62 Pages Posted: 13 Dec 2015 Last revised: 10 Mar 2019

See all articles by John (Jianqiu) Bai

John (Jianqiu) Bai

Northeastern University - D'Amore-McKim School of Business

Date Written: March 02, 2019

Abstract

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

Bai, John (Jianqiu), Organizational Form and Trade Liberalization: Plant-Level Evidence (March 02, 2019). Available at SSRN: https://ssrn.com/abstract=2702516 or http://dx.doi.org/10.2139/ssrn.2702516

John (Jianqiu) Bai (Contact Author)

Northeastern University - D'Amore-McKim School of Business ( email )

Boston, MA 02115
United States

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