Firm productivity and functional specialisation

This paper examines the relation between productivity and specialisation of firms in business functions. We distinguish between specialisation in R&D, fabrication and marketing based on the firm's employment composition over these functions using unique survey data of Dutch firms. Our results suggest that firms specialised in R&D and marketing are significantly more productive compared to firms specialised in fabrication. We find that measures of upstreamness based on input–output tables do not significantly relate to firm productivity and are uncorrelated to measures of functional specialisation.