Female entrepreneurs, firm performance, and resource misallocation

Thesis: Aggregate productivity is one of the major sources of economic growth and directly depends on how efficiently firms use available resources. In this dissertation, I contribute to the literature by drawing attention to exploring various performance measures at the firm level and the aggregate productivity in developing countries. In general, firms face numerous and serious constraints on their productivity in developing countries, ranging from corruption to lack of infrastructure to inability to access finance. Therefore, in the first chapter co-authored with Zenathan Hasannudin, we investigate the impact of financing access on micro and small enterprises (MSEs) in Indonesia. MSEs are considered the backbone of the Indonesian economy accounting for 99.3% of total firms in Indonesia and providing 62.5% of total employment. We found that access to external formal financial source has a significant positive effect on the growth of firms in terms of total factor productivity (TFP), labor productivity, and sales in Indonesia. In addition small firms must rely more on their funds to invest and grow significantly faster if they have greater access to external funds. Moreover, in developing countries, women entrepreneurs are key drivers of national, regional, and global growth. Therefore, examining their role in the second chapter is important and studying their impact on firm growth as measured by employment and sales growth. In addition, I highlight the effect of gender-differentiated use of formal external credit on the performance gaps between men’s and women’s firms. The data used is a sample of 33,971 firms from 62 countries over the period 2006-2016. Overall, the study confirms mixed results of women-owned firms ill firm growth across regions and income-level countries. Finally, in the last chapter, l used the Hsieh and Klenow (2009) framework to study the misallocation and productivity linkages in the Indonesian manufacturing sector using the datasets of 103.018 observations during the period 1990-2015. Reallocation of resources from low productivity firms to high productivity firms can generate significant aggregate gains. This study uses census data from Indonesia’s manufacturing sector to measure the country’s hypothetical productivity gains ; the productivity gaps appear to have widened somewhat. This suggests that the process of "catching up" remains a challenge and a potential opportunity, especially if total factor productivity is assumed to be the dominant source of future economic growth. This analysis only considers the misallocation of resources within sectors. There may be other, perhaps significant, misallocations of resources across sectors. If so, closing these gaps could further boost total factor productivity and gross domestic product growth.

Author(s)

Zeinab Elbeltagy

Date of publication
  • 2021
Keywords
  • Total factor productivity
  • Gender
  • Access to finance
  • Firm growth
  • Resource misallocation
  • Firm-level data
  • Indonesia
Issuing body(s)
  • Université Panthéon-Sorbonne – Paris I
Date of defense
  • 16/12/2021
Thesis director(s)
  • Jean-Olivier Hairault
  • François Langot
Pages
  • 191 p.
Version
  • 1