CREAT: Census Research Exploration and Analysis Tool

Industry Learning Environments and the Heterogeneity of Firm Performance

December 2006

Working Paper Number:

CES-06-29

Abstract

This paper characterizes inter-industry heterogeneity in rates of learning-by-doing and examines how industry learning rates are connected with firm performance. Using data from the Census Bureau and Compustat, we measure the industry learning rate as the coefficient on cumulative output in a production function. We find that learning rates vary considerably among industries and are higher in industries with greater R&D, advertising, and capital intensity. More importantly, we find that higher rates of learning are associated with wider dispersion of Tobin's q and profitability among firms in the industry. Together, these findings suggest that learning intensity represents an important characteristic of the industry environment.

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:
profitability, investment, production, econometric, manufacturing, sale, company, growth, earnings, gain, acquisition, industry productivity, efficiency, sector, specialization, innovation, profit, revenue, competitor, industry heterogeneity

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:
Annual Survey of Manufactures, Standard Industrial Classification, Longitudinal Research Database, Ordinary Least Squares, Total Factor Productivity, National Bureau of Economic Research, Cobb-Douglas, Census of Manufacturing Firms, Generalized Method of Moments, Research Data Center

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