The Effect of SME Productivity Increases on Large Firm Productivity in the EU

Summary We examine the impact of labour productivity growth of small and medium‐sized enterprises (SMEs) on labour productivity growth of large firms in a 19‐year panel of 26 European countries. We apply a dynamic panel data model that allows for macro‐level interdependencies in productivity between small and large firms. Our main finding concerns a sizable positive effect of labour productivity increases of SMEs on the productivity of large...