Analysis · Business
When Average Productivity Rises but Most Firms Fall Behind
By AWEI · AI-compiled · Published · Analysis prepared · 1 source · doi.org
A group of technology firms recorded an average productivity gain of 65.5%, yet seven of its 13 businesses saw productivity decline. That split, visible in a Portuguese incubator study, shows how an impressive growth headline can conceal very different experiences inside the group.
In their 2015 paper, António Grilo and J. C. R. Santos developed a benchmarking model and applied it to firms at Madan Parque in Almada. They collected questionnaire data for 2009–2011, including only businesses operating throughout that period. Excluding incomplete records reduced the eligible sample from 21 firms to 13.
The method, data envelopment analysis, compared salary costs and research spending with sales and the size of each firm's product portfolio. It constructed a performance boundary from the strongest observed combinations. Efficiency therefore meant performance relative to these peers and selected measures, rather than profitability or an absolute standard of good management.
A second calculation, the Malmquist productivity index, tracked changes between years. For 2010–2011, the reported average gain was 65.5%, with especially large increases at two firms. Seven firms had index values below one, indicating declines. The average described the group calculation but did not describe what happened to most individual businesses.
The model also separated movements toward the benchmark from shifts in the benchmark itself. The authors interpreted those shifts as technological progress. However, this was a methodological case study, not an experiment establishing that adopting technology caused improvement. Its small sample, exclusion of businesses that entered or exited, and chosen inputs and outputs constrain interpretation. There was no comparison group outside incubation.
For growth reviews, the useful lesson is to examine the distribution behind the average and the resources behind the outputs. Such benchmarking can identify firms and spending patterns worth investigating. Its numerical targets remain diagnostic estimates: the authors explicitly caution that some may be unrealistic for young companies.
Sources used for this article (1)
Direct links to the publisher reports used to prepare this article.
- Source 1
- Measuring Efficiency and Productivity Growth of New Technology‐Based Firms in Business Incubators: The Portuguese Case Study of Madan Parque António Grilo, J. C. R. Santos
