Demand shocks drive firm growth as much as productivity, study finds.
The study looked at what makes companies grow - is it high demand for their products or being really productive? They found that both are important, but demand is just as crucial as productivity. Companies don't always react as quickly to changes as we might expect, which suggests there are obstacles in the way. These obstacles have a bigger impact on how companies respond to productivity changes compared to demand changes. This shows that different obstacles affect companies in different ways, making it harder for them to adapt to changes in how well they make things.