Working Papers,
Copenhagen Business School, Department of Economics

Abstract: This study empirically investigates if competition’s impact on firm performance depends on the ownership structure. Our results show that an increase in import competition has a positive effect on firms with concentrated ownership and a negative effect on firms with dispersed ownership, regardless of the level of domestic competition. Given that the optimal level of ownership concentration with respect to firm productivity is high (low) if tariffs are low (high) in the case when import competition is high these results are consistent with theoretical findings that competition has positive effects in companies that are a priori efficient but not in unproductive firms. If tariffs are high, however, they support inferences based on the x-inefficiency literature. Contrary to what has been suggested by some theoretical results, the riskiness of a firm’s environment does not seem to influence our results.

Keywords: competition; productivity

JEL-codes: D41; L22

21 pages, January 1, 2009

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