ORIGINAL ARTICLE
How does warfare affect firms' productivity?
Andres F. Jola-Sanchez,
Corresponding Author
Andres F. Jola-Sanchez
Mays Business School, Texas A&M University, College Station, Texas, USA
Correspondence
Andres F. Jola-Sanchez, Mays Business School, Texas A, and M University, College Station, TX, 77843, USA.
Email: [email protected]
Search for more papers by this authorAndres F. Jola-Sanchez,
Corresponding Author
Andres F. Jola-Sanchez
Mays Business School, Texas A&M University, College Station, Texas, USA
Correspondence
Andres F. Jola-Sanchez, Mays Business School, Texas A, and M University, College Station, TX, 77843, USA.
Email: [email protected]
Search for more papers by this authorHandling editor: Aleda Roth
Accepted by Aleda Roth, after 4 revisions.
Abstract
Warfare afflicts millions and creates unparalleled operational challenges in the developing world. With data from war-torn Colombia, I examine the effects of civil war on firms' total factor productivity (TFP) using propensity score and conflict hotspot models. I find that warfare increases TFP in service firms, such as public administration and defense, by up to 12.68%, whereas it decreases TFP in manufacturing and other nonservice companies by up to 3.64% a year after a violent episode occurs. This effect stems from intellectual capital growth and service firms' ability to create value from customer input.
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