Age, diversification and survival in the German machine tool industry, 1953-2002
AbstractWe focus on the relationship of age and diversification patterns of German machine tool manufacturers in the post war era. Based on trade journals we track the entire firm populations' product portfolio development throughout each firm's lifetime. We distinguish between 'minor diversification' and 'major diversification', where these two concepts refer to adding a new product variation within a familiar submarket, or expanding the product portfolio into new submarkets. Our analysis reveals four main insights. First, we observe that firms have lower diversification rates as they grow older, and that eventually diversification rates even turn negative for old firms on average. Second, we find that product portfolios of larger firms tend to be more diversified. Third, with respect to consecutive diversification activities, quantile autoregression plots show that firms experiencing diversification in one period are unlikely to repeat this behavior in the following year. Fourth, survival estimations reveal that diversification activities reduce the risk of exit controlling for various additional firm and industry specific fixed effects and business cycles. These results are interpreted using the Penrosean growth theory.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Max Planck Institute of Economics, Evolutionary Economics Group in its series Papers on Economics and Evolution with number 2011-23.
Length: 30 pages
Date of creation: 03 Jan 2012
Date of revision:
Find related papers by JEL classification:
- L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-01-18 (All new papers)
- NEP-BEC-2012-01-18 (Business Economics)
- NEP-ENT-2012-01-18 (Entrepreneurship)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- E. Cefis & O. Marsili & E.J.J. Schenk, 2006.
"The effects of mergers and acquisitions on the firm size distribution,"
06-17, Utrecht School of Economics.
- Elena Cefis & Orietta Marsili & Hans Schenk, 2009. "The effects of mergers and acquisitions on the firm size distribution," Journal of Evolutionary Economics, Springer, vol. 19(1), pages 1-20, February.
- Marshall, Alfred, 1890. "The Principles of Economics," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number marshall1890.
- Peter Thompson & Steven Klepper, 2003.
"Submarkets and the Evolution of Market Structure,"
0303, Florida International University, Department of Economics.
- Coad, Alex & Segarra Blasco, Agustí & Teruel Carrizosa, Mercedes, 2010.
"Like milk or wine: Does firm performance improve with age?,"
2072/179572, Universitat Rovira i Virgili, Department of Economics.
- Coad, Alex & Segarra, Agustí & Teruel, Mercedes, 2013. "Like milk or wine: Does firm performance improve with age?," Structural Change and Economic Dynamics, Elsevier, vol. 24(C), pages 173-189.
- Alex Coad & Agustí Segarra & Mercedes Teruel, 2010. "Like milk or wine: Does firm performance improve with age?," Working Papers XREAP2010-10, Xarxa de Referència en Economia Aplicada (XREAP), revised Sep 2010.
- Alex Coad & AgustÃ Segarra & Mercedes Teruel, 2010. "Like milk or wine: Does firm performance improve with age?," Papers on Economics and Evolution 2010-06, Max Planck Institute of Economics, Evolutionary Economics Group.
- Coad, Alex, 2010.
"Investigating the exponential age distribution of firms,"
Economics - The Open-Access, Open-Assessment E-Journal,
Kiel Institute for the World Economy, vol. 4(17), pages 1-30.
- Alex Coad, 2009. "Investigating the exponential age distribution of firms," Papers on Economics and Evolution 2009-23, Max Planck Institute of Economics, Evolutionary Economics Group.
- Coad, Alex, 2010. "Investigating the exponential age distribution of firms," Economics Discussion Papers 2010-12, Kiel Institute for the World Economy.
- Youngki Lee & Luis A. N. Amaral & David Canning & Martin Meyer & H. Eugene Stanley, 1998. "Universal features in the growth dynamics of complex organizations," Papers cond-mat/9804100, arXiv.org.
- Flora Bellone & Patrick Musso & Lionel Nesta & Michel Qu�r�, 2008. "Market selection along the firm life cycle," Industrial and Corporate Change, Oxford University Press, vol. 17(4), pages 753-777, August.
- Steven Klepper & Sally Sleeper, 2005.
"Entry by Spinoffs,"
INFORMS, vol. 51(8), pages 1291-1306, August.
- Guido Buenstorf & Christina Guenther, 2007.
"No Place like Home? Location choice and firm survival after forced relocation in the German machine tool industry,"
DRUID Working Papers
07-16, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
- Guido Buenstorf & Christina Guenther, 2007. "No place like home? Location choice and firm survival after forced relocation in the German machine tool industry," Jena Economic Research Papers 2007-053, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
- Elena Huergo & Jordi Jaumandreu, 2004. "How Does Probability of Innovation Change with Firm Age?," Small Business Economics, Springer, vol. 22(3_4), pages 193-207, 04.
- Joao Pedro Azevedo, 2004. "GRQREG: Stata module to graph the coefficients of a quantile regression," Statistical Software Components S437001, Boston College Department of Economics, revised 17 Mar 2011.
- Giulio Bottazzi & Angelo Secchi, 2006. "Gibrat's Law and diversification," Industrial and Corporate Change, Oxford University Press, vol. 15(5), pages 847-875, October.
- Alex Coad & Jaganaddha Tamvada, 2012. "Firm growth and barriers to growth among small firms in India," Small Business Economics, Springer, vol. 39(2), pages 383-400, September.
- Teece, David J. & Rumelt, Richard & Dosi, Giovanni & Winter, Sidney, 1994. "Understanding corporate coherence : Theory and evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 23(1), pages 1-30, January.
- Mercedes Teruel-Carrizosa, 2010. "Gibrat’s law and the learning process," Small Business Economics, Springer, vol. 34(4), pages 355-373, May.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Karin Serfling).
If references are entirely missing, you can add them using this form.