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Firm Structure, Multinationals, and Manufacturing Plant Deaths

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Author Info
Andrew B. Bernard () (Dartmouth College)
J. Bradford Jensen () (Institute for International Economics)

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Abstract

Plant shutdowns shape industry productivity, the dynamics of employment, and industrial restructuring. Plant closures account for more than half of gross job destruction in US manufacturing. This paper examines the effects of firm structure on US manufacturing plant closures. Plants belonging to multi-plant firms and those owned by US multinationals are less likely to exit. However, the superior survival chances are due to the characteristics of the plants rather than the nature of the firms. Controlling for plant and industry attributes, we find that plants owned by multi-unit firms and US multinationals are much more likely to close.

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Paper provided by Peterson Institute for International Economics in its series Peterson Institute Working Paper Series with number WP06-7.

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Date of creation: Sep 2006
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Handle: RePEc:iie:wpaper:wp06-7

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Related research
Keywords: Exit; shutdown; closure; multi-plant firms; multinational firms; takeovers; entry costs; agglomeration; specialization;

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Find related papers by JEL classification:
D21 - Microeconomics - - Production and Organizations - - - Firm Behavior
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
L6 - Industrial Organization - - Industry Studies: Manufacturing

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References listed on IDEAS
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.:
  1. Andrew B Bernard & Jonathan Eaton & J. Bradford Jensen & Samuel Kortum, 2000. "Plants and productivity in international trade," Working Papers 00-08, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
    Other versions:
  2. Dunne, Timothy & Roberts, Mark J & Samuelson, Larry, 1989. "The Growth and Failure of U.S. Manufacturing Plants," The Quarterly Journal of Economics, MIT Press, vol. 104(4), pages 671-98, November. [Downloadable!] (restricted)
    Other versions:
  3. Antràs, Pol & Helpman, Elhanan, 2004. "Global Sourcing," CEPR Discussion Papers 4170, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  4. Duranton, Gilles & Puga, Diego, 1999. "Diversity and Specialization in Cities: Why, Where and When Does It Matter?," CEPR Discussion Papers 2256, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  5. Gollop, Frank M & Monahan, James L, 1991. "A Generalized Index of Diversification: Trends in U.S. Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 73(2), pages 318-30, May. [Downloadable!] (restricted)
  6. Andrew B. Bernard & J. Bradford Jensen & Peter K. Schott, 2005. "Importers, Exporters, and Multinationals: A Portrait of Firms in the U.S. that Trade Goods," NBER Working Papers 11404, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  7. G. Steven Olley & Ariel Pakes, 1992. "The Dynamics of Productivity in the Telecommunications Equipment Industry," NBER Working Papers 3977, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Bernard, Andrew B. & Bradford Jensen, J., 1999. "Exceptional exporter performance: cause, effect, or both?," Journal of International Economics, Elsevier, vol. 47(1), pages 1-25, February. [Downloadable!] (restricted)
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  9. Andrew B. Bernard & Fredrik Sjoholm, 2003. "Foreign Owners and Plant Survival," NBER Working Papers 10039, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. John Haltiwanger & C J Krizan & Lucia Foster, 1998. "Aggregate Productivity Growth: Lessons From Microeconomic Evidence," Working Papers 98-12, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
    Other versions:
  11. Braconier, Henrik & Ekholm, Karolina, 2000. "Swedish Multinationals and Competition from High- and Low-Wage Locations," Review of International Economics, Blackwell Publishing, vol. 8(3), pages 448-61, August. [Downloadable!] (restricted)
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  12. Marvin B. Lieberman, 1990. "Exit from Declining Industries: "Shakeout" or "Stakeout"?," RAND Journal of Economics, The RAND Corporation, vol. 21(4), pages 538-554, Winter. [Downloadable!] (restricted)
  13. Roberts, Mark J & Tybout, James R, 1997. "The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs," American Economic Review, American Economic Association, vol. 87(4), pages 545-64, September. [Downloadable!] (restricted)
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  15. Andrew B. Bernard, 2004. "Exporting and Productivity in the USA," Oxford Review of Economic Policy, Oxford University Press, vol. 20(3), pages 343-357, Autumn.
  16. Pol Antràs, 2003. "Firms, Contracts, And Trade Structure," The Quarterly Journal of Economics, MIT Press, vol. 118(4), pages 1375-1418, November. [Downloadable!] (restricted)
    Other versions:
  17. Melitz, Marc J, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," CEPR Discussion Papers 3381, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  18. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-97, November. [Downloadable!] (restricted)
  19. Dunne, T. & Roberts, M.J. & Samuelson, L., 1988. "Pattenrs Of Firm Entry And Exit In U.S. Manufacturing Industries," Papers 1-88-2, Pennsylvania State - Department of Economics.
    Other versions:
  20. Gene M. Grossman & Elhanan Helpman & Adam Szeidl, 2003. "Optimal Integration Strategies for the Multinational Firm," NBER Working Papers 10189, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  21. Ericson, Richard & Pakes, Ariel, 1995. "Markov-Perfect Industry Dynamics: A Framework for Empirical Work," Review of Economic Studies, Blackwell Publishing, vol. 62(1), pages 53-82, January. [Downloadable!] (restricted)
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  23. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May. [Downloadable!] (restricted)
  24. Gibson,J.K. & Harris,R.I.D., 1996. "Trade Liberalisation and Plant Exit in New Zealand Manufacturing," Papers 66, Portsmouth University - Department of Economics.
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  25. Grossman, Gene & Helpman, Elhanan, 2003. "Managerial Incentives and the International Organization of Production," CEPR Discussion Papers 3737, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  26. Hopenhayn, Hugo A., 1992. "Exit, selection, and the value of firms," Journal of Economic Dynamics and Control, Elsevier, vol. 16(3-4), pages 621-653. [Downloadable!] (restricted)
  27. Reynolds, Stanley S, 1988. "Plant Closings and Exit Behaviour in Declining Industries," Economica, London School of Economics and Political Science, vol. 55(220), pages 493-503, November. [Downloadable!] (restricted)
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  29. Holger Görg & Eric Strobl, 2003. ""Footloose" Multinationals?," Manchester School, University of Manchester, vol. 71(1), pages 1-19, January. [Downloadable!] (restricted)
    Other versions:
  30. repec:rus:hseeco:122439 is not listed on IDEAS
  31. Dunne, T. & Roberts, M.J., 1989. "Variation In Producer Turnover Across U.S. Manufacturing Industries," Papers 12-89-2, Pennsylvania State - Department of Economics.
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Full references

Cited by:
(explanations, 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.)

  1. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2007. "Firms in International Trade," NBER Working Papers 13054, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Andrew B. Bernard & Stephen J. Redding & Peter K. Schott, 2006. "Multi-Product Firms and Product Switching," NBER Working Papers 12293, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Hakkala, Katariina & Heyman, Fredrik & Sjöholm, Fredrik, 2007. "Cross-Border Acquisitions, Multinationals and Wage Elasticities," Working Paper Series 709, Research Institute of Industrial Economics. [Downloadable!]
  4. Roberto Alvarez & Holger Görg, 2005. "Multinationals and Plant Exit: Evidence from Chile," IZA Discussion Papers 1611, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  5. Coucke, K. & Sleuwaegen, L., 2006. "Exit in globalising industries: the role of international (out)sourcing," Vlerick Leuven Gent Management School Working Paper Series 2006-14, Vlerick Leuven Gent Management School. [Downloadable!]
  6. Helen Simpson, 2008. "Investment Abroad and Adjustment at Home: evidence from UK multinational firms," The Centre for Market and Public Organisation 08/207, Department of Economics, University of Bristol, UK. [Downloadable!]
    Other versions:
  7. Sarianna M. Lundan, 2007. "The Home Country Effects of Internationalisation," Discussion Papers 1100, The Research Institute of the Finnish Economy. [Downloadable!]
  8. Roger Bandick & Holger Görg, . "Foreign Acquisitions, Plant Survival, and Employment Growth," Discussion Papers 09/13, University of Nottingham, GEP. [Downloadable!]
    Other versions:
  9. Ingo Geishecker & Holger Görg & Daria Taglioni, 2008. "Characterizing Euro Area Multinationals," Kiel Working Papers 1413, Kiel Institute for the World Economy. [Downloadable!]
    Other versions:
  10. Kugler, Maurice & Verhoogen, Eric A., 2009. "The Quality-Complementarity Hypothesis: Theory and Evidence from Colombia," CEPR Discussion Papers 7119, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  11. Christian Helmers & Mark Rogers, 2008. "Innovation and the Survival of New Firms Across British Regions," Economics Series Working Papers 416, University of Oxford, Department of Economics. [Downloadable!]
  12. Christopher Johann Kurz, 2006. "Outstanding Outsourcers: A Firm- and Plant-Level Analysis of Production Sharing," Working Papers 06-02, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
  13. Brown, Jason P. & Lambert, Dayton M., 2009. "Short-run Birth and Death of U.S. Manufacturing Firms: 2000 - 2005," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46739, Southern Agricultural Economics Association. [Downloadable!]
  14. Coucke, K. & Sleuwaegen, L., 2007. "Offshoring as a Survival Strategy in Globalizing Industries: New Evidence from Belgian Manufacturing," Vlerick Leuven Gent Management School Working Paper Series 2007-13, Vlerick Leuven Gent Management School. [Downloadable!]
  15. Marialuz Moreno Badia & Veerle Slootmaekers & Ilke Van Beveren, 2008. "Globalization Drives Strategic Product Switching," IMF Working Papers 08/246, International Monetary Fund. [Downloadable!]
  16. Deborah L. Swenson, 2004. "Overseas Assembly and Country Sourcing Choices," NBER Working Papers 10697, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  17. Christopher Johann Kurz, 2006. "Outstanding outsourcers: a firm- and plant-level analysis of production sharing," Finance and Economics Discussion Series 2006-04, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
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