Productivity Levels in the Business Services Sector

One of the interesting findings of the newly released OECD Compendium of Productivity Indicators 2023 is that smaller firms in many countries outperform larger ones in productivity levels in the business services sector. 

The data in the report shows that, on average across the business economy, larger firms are more productive than smaller ones, particularly in the manufacturing sector where economies of scale play a significant role. 

However, in the business services sector, smaller firms are found to have a productivity advantage over their larger counterparts in many OECD countries. According to the OECD this reflects smaller firms “competitive advantages in niche, high brand or high intellectual property content activities as well as the intensive use of information and communications technologies (ICT).” 

Note that the chart does not compare productivity levels between countries, only productivity differences within each country by firm size.

The OECD defines business services to include the following industries: wholesale and retail trade, repair of motor vehicles and motorcycles; transportation and storage; accommodation and food services; information and communication services; real estate activities; and professional, scientific, administrative and support activities.