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A growing literature aiming at explaining differences in productivity and access to global export markets across firms has focused on the internal organization of firms. This paper contributes to this literature by evaluating the impact of a program that aims at enhancing competitiveness of small and medium enterprises in Brazil by providing coaching and consulting on management and production practices. Specifically, the paper tests whether the program induces treated firms to reorganize knowledge by adding more layers of different skills and competencies to their workforces. Using a unique firm-level data set, the number of layers of knowledge of the firms are compared before and after the program. The impact of the program is identified by relying on an instrumental variable approach, exploiting the quasi-experimental roll-out of its implementation, which was carried out at different times across Brazilian regions. The analysis finds that the program had an effect and that this effect is heterogeneous. The program is particularly effective in promoting the reorganization of small and medium firms. The results confirm another finding of the literature, namely that in re-organized firms wage inequality increases. Finally, these results are used to discuss how the change in firms’ organization is positively correlated with export performance.
This paper evaluates the impact of the Peiex program, a consulting service on management and production practices provided by Apex-Brasil aimed at improving the competitiveness of small and medium firms. We found a positive impact of Peiex on firms’ organization. Based on the IV identification strategy, firms that received the program increased by approximately 11.5%, on average, the predicted number of layers of knowledge-based hierarchy. We find that our results are driven by increasing the number of layers of knowledge-based hierarchy for small and medium firms, defined as firms between 10 and less than 100 employees two consecutive years before the program started. In addition, we find that Peiex firms have expanded the hours hired of production workers, the reorganization of those firms is associated with an increase in the likelihood of being an exporter and a rise in wage inequality between layers of hierarchy based on knowledge. Understand whether firms promote lower-level workers or hire new ones when changing the organization of knowledge is an important avenue for future research.