Capital productivity and cost structure: analysis of firm level data

Capital productivity is one of the factors that can influence the cost structure of firms.Firms are interested in using their capital as efficiently as possible to achieve higher productivity and reduce the cost per unit of output, thereby improving their competitiveness and profitability of the firm.The aim of this paper was to assess if the change in capital productivity has an impact on the cost structure in terms of personnel costs and material costs for manufacturing firms (textile industry) in EU 27 countries.An empirical study of 1407 textile firms showed that capital productivity is affected by the amount of tangible and intangible fixed assets acquired.It was found that over the period under study, as the size of fixed assets increased, firms were able to increase capital productivity and to use newly acquired assets more efficiently to increase firm revenues.The impact of the change in capital productivity of enterprises on the change in the share of personnel costs and share of material costs has not been found.