Productivity Dynamism in Japan: Firm Size, Resource Reallocation, and the Negative Exit Effect

This talk presents a comprehensive view of Japan’s evolving productivity dynamism by integrating multiple strands of firm-level research. Building on earlier studies on mid-sized company performance, I bring new evidence from Teikoku Databank (1999–2020) to dissect how firm-size heterogeneity, resource reallocation, entry/exit dynamics, and negative exit effects jointly shape productivity trajectories. The findings reveal that large firms’ internal improvements have waned, reallocation contributions from small and mid-sized firms have become more salient, and nearly half of negative exit pressures stem from M&A-induced exits. The talk draws lessons for industrial restructuring, SME growth pathways, and institutional reforms that support reallocation across firms and sectors.