The report (The Future of Productivity, Clear Choices for a Competitive Canada) points out that large firms are more productive than smaller ones but that the higher concentration of larger firms in the US does not explain the difference. Differences in the size of businesses are not an explanation for the differences between the two countries. Productivity is higher in the US across all firm sizes.
Interestingly, the report suggests that the US financial sector is more productive than its Canadian counterparts. This is perhaps counterintuitive, especially since many of the large US financial institutions such as Lehman Bros and Bear Stearns no longer exist. This raises the issue of "sustainable competition" in a different light. In addition to the impact of productivity on environments and societies, it would be worth considering whether competition is sustainable for the individual and the organization over the longer term. For many US financial services companies it wasn't simply because they took excessive risks, it was that they engaged in practices which were often illegal and unsustainable such as accepting "no doc loans".|
The results for the oil and gas sector are also surprising and show Canadian firms perform poorly compared to their US counterparts. One might think Canada would excel in productivity gains here given the importance of the sector and of the investments made in the oil sands and off shore. In fact the report does suggest that both the sectors in the US and Canada had declined in terms of productivity but that this is largely due to massive increases in investment in both countries which in the short term decreases productivity while it is necessary to increase productivity over the longer term. Also, because this sector is a much larger proportion of the Canadian economy the overall effect of the decline is much greater on the Canadian economy than it is in the US.
In manufacturing Canadian productivity improvements were lower across all sectors the study looked at. Generally this is explained by three factors, the rising Canadian dollar, rising labour costs which to some extent are associated with the higher exchange rate and less investment in new technologies. The report says that Canadian businesses made only 52% of the investment that US firms per worker in labour saving machinery over the period from 2000 to 2007. A question of interest here would be why is the case. Is it because Canadian managers and owners are risk adverse? The question of risk aversion among Canadian business leaders would be a question worth exploring further.