Title: Globalisation's influence on firm productivity: an empirical exploration of dimension-specific effects and causality

Authors: Balraj Verma; Amit Srivastava

Addresses: Chitkara Business School, Chitkara University, Punjab, 140401, India ' Department of Humanities and Social Sciences, Jaypee University of Information Technology, Waknaghat, Solan (HP), 173234, India

Abstract: The study evaluates the impact of various dimensions of globalisation on firms' productivity across 14 Indian sectors, against the backdrop of significant structural and policy changes implemented over the past few decades. The study employed panel regression, the VAR model and Granger causality using unbalanced panel data of 1824 firms (2000-2021). The results revealed that three out of six dimensions of globalisation positively influenced firm productivity. Notably, among sectors, the 'consumer goods' sector experienced the most significant gains, followed by 'wholesale, retail, and trade'. Conversely, the financial, and communications sectors exhibit the least improvement. Although, the study found no long-run causation between globalisation and firm productivity, trade, financial, and informational globalisation demonstrated a short-run causal relationship with firms' productivity. Furthermore, the study also revealed the existence of bi-directional causality between informational globalisation and firms' productivity.

Keywords: globalisation; FDI; foreign direct investment; KOF index; TFP; total factor productivity; firm-level analysis; sectoral analysis; India.

DOI: 10.1504/IJGSB.2024.145741

International Journal of Globalisation and Small Business, 2024 Vol.14 No.4, pp.362 - 383

Received: 25 Jul 2024
Accepted: 16 Feb 2025
Published online: 18 Apr 2025 *

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