Demand shocks drive firm growth more than productivity shocks, study finds.
The study looked at what makes companies grow - is it high demand for their products or how productive they are? By studying Italian manufacturing firms, the researchers found that both demand and productivity play a big role in a company's growth. They also discovered that companies don't always respond quickly to changes in demand or productivity, suggesting there are obstacles that slow down their reactions. Interestingly, companies are more affected by changes in productivity than changes in demand, showing that different obstacles can impact how companies adapt to these changes.