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From Russia with Love: The Impact of Relocated Firms on Incumbent Surv ival

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  • Falck, Oliver
  • Guenther, Christina
  • Heblich, Stephan
  • Kerr, William R

Abstract

We identify the impact of local firm concentration on incumbent performance with a quasi natural experiment. When Germany was divided after World War II, many firms in the machine tool industry fled the Soviet occupied zone to prevent expropriation. We show that the regional location decisions of these firms upon moving to western Germany were driven by non-economic factors and heuristics rather than existing industrial conditions. Relocating firms increased the likelihood of incumbent failure in destination regions, a pattern that differs sharply from new entrants. We further provide evidence that these effects are due to increased competition for local resourc es.

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Bibliographic Info

Paper provided by University of Stirling, Division of Economics in its series Stirling Economics Discussion Papers with number 2011-17.

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Date of creation: Jul 2011
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Handle: RePEc:stl:stledp:2011-17

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Postal: Division of Economics, University of Stirling, Stirling, Scotland FK9 4LA
Phone: +44 (0)1786 467473
Fax: +44 (0)1786 467469
Web page: http://www.econ.stir.ac.uk/
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Keywords: Germany; labor; firm dynamics; competition; Agglomeration;

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Cited by:
  1. Aaron Chatterji & Edward Glaeser & William Kerr, 2013. "Clusters of Entrepreneurship and Innovation," NBER Chapters, in: Innovation Policy and the Economy, Volume 14, pages 129-166 National Bureau of Economic Research, Inc.
  2. Ludger Wößmann, 2011. "Die Bedeutung von Bildung für die Wirtschaftsentwicklung: Eine neue wirtschaftshistorische Forschungsagenda anhand preußischer Kreisdaten, Teil 2," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 64(01), pages 41-47, 01.
  3. Ghani, Ejaz & Kerr, William R. & O'Connell, Stephen D., 2013. "Input usage and productivity in Indian manufacturing plants," Policy Research Working Paper Series 6656, The World Bank.
  4. Martin Obschonka & Eva Schmitt-Rodermund & Rainer K. Silbereisen & Samuel D. Gosling & Jeff Potter, 2013. "The Regional Distribution and Correlates of an Entrepreneurship-Prone Personality Profile in the United States, Germany, and the United Kingdom: A Socioecological Perspective," SOEPpapers on Multidisciplinary Panel Data Research 550, DIW Berlin, The German Socio-Economic Panel (SOEP).

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