Organizational Form and Trade Liberalization: Plant-Level Evidence.

Bai, John

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 and improving firm productivity and product market performance. Adjustments through the extensive margin account for the majority 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. This paper was accepted by Gustavo Manso, finance.

FREE trade; INTERNATIONAL trade; AGGREGATE industry; COMMERCIAL policy; PRODUCTIVITY accounting

Management Science, 2021, Vol 67, Issue 12, p7755

1526-5501

Academic Journal

10.1287/mnsc.2020.3830