Productivity is essential for economic development. However, the computation of the total factor productivity (TFP) for research and development (R&D) firms is largely ignored by the previous literature, in particular in the Eastern European countries.
OBJECTIVE:
The purpose of this paper is to analyze to what extent the national human capital index (NHCI) influences TFP for a set of 116 Romanian firms, acting in the R&D industry.
METHODS:
We compute the TFP level using different approaches, by analyzing firm-level data from the period of 2007 to 2016. At the same time, we resort to a common factor analysis (CFA) to derive the NHCI for Romania. Afterwards we apply a panel data investigation to see the impact of NHCI on TFP and we use several control variables as firm-level financial performances and firm’s size.
RESULTS:
Our estimation reveals that NHCI, a component of the national intellectual capital index, has a significant but marginal impact on TFP, whereas the financial performances play a more important role in enhancing firms’ productivity.
CONCLUSIONS:
The national human capital influences the firm productivity in the long run. At the same time, larger companies are financially more stable compared with their smaller counterparts and record a higher TFP.
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