Source: Mary Amiti et al., “FDI and Superstar Spillovers: Evidence from Firm-to-Firm Transactions,” NBER Working Paper Series, no. w31128 (October 2023).
Commentary: A revised October 2023 working paper by Mary Amiti et al. analyzed the effect that selling to “superstar” firms has on productivity and other performance indicators. In this case, the authors measured productivity using total factor productivity (TFP). The study used firm-level data on Belgian firms from the National Bank of Belgium and Eurostat between 2002 and 2014. The authors define “superstar” firms to include large firms, exporting firms, and multinationals. In this case, they also defined large firms as those in the top 0.1 percent of the sales distribution.
The results of the study suggest significant benefits to establishing a relationship as a supplier to superstar firms. Overall, firms that establish supply chain links with superstar firms saw an increase in TFP of about 8 percent after three years. The authors also looked at the effects of establishing relationships with multinationals and with exporters. They found that supplying to multinational superstars increased TFP by about 8.9 percent after three years. When looking at exporters, supplying to exporting superstars increased TFP by about 7.1 percent after three years. Perhaps unsurprisingly, supplying to multinationals and to exporters also increased sales after three years by about 21.4 percent and 17.2 percent respectively. Even when looking at large-sales firms that were neither multinationals nor exporters, establishing supply chain links still increased TFP by about 8.6 percent and sales by about 18.2 percent after one or more years. With regard to the effects on workers, links to multinationals and to exporters increased employment by about 15.3 percent and 12.4 percent, respectively, after one year or more years. Additionally, links to multinationals and to exporters increased total wages by about 20.2 percent and 17.7 percent, respectively, after three years.
