Micro-level Evidence on the Survival of German Manufacturing Industries - A Multidimensional Analysis (refereed paper)
AbstractSeveral empirical studies showed that it is not the level of entrepreneurial activity itself, but the (long-term) survival and growth of new firms that determine the direct and indirect contribution of new businesses to regional employment. To this end, the aim of this paper is to analyze the determinants of the survival of German manufacturing establishments devoting special interest to the multi-dimension approach, thus investigating business-, industry-, and region-specific survival determinants. By using a micro-panel data set of all German manufacturing establishments for the period 1992 to 2005, we employ both non-parametric and semi-parametric procedures that are specifically designed to analyze duration phenomena in order to ascertain survival determinants by explaining the time period between a firmâ€šÃ„Ã´s start-up and its cessation of economic activity. The results enable us to give advice on how to improve the survival conditions of businesses in certain regions and industries and, thus, to enhance the number of establishments with the potential to contribute to regional employment. The main findings indicate that the probability of exit is higher for very young and rather old businesses and also for relatively small businesses. Besides the overall finding of a higher exit risk in agglomerated areas, an above-average level of highly qualified employees working in the establishments decreases the probability of exit. Accordingly, businesses in R&D intensive or high-tech industries enjoy better survival prospects than businesses in other industries. Moreover, we find evidence that that regional industry specialization is not beneficial for the survival of newcomers in a respective industry. This result adds some interesting points to the findings of Dumais, Ellison and Glaeser (2002) who discovered that closure is less likely in those regions that belong to the current geographic centers of an industry and tends to increase geographic concentration. Our results suggest that in German manufacturing industries not only a businessâ€šÃ„Ã´ entry but also its survival chances (in opposition to closure in general) are forces that reduce geographic concentration. Possible benefits from geographically bounded, within-industry spillovers seem to be of less importance than the counterforce of intensified local competition for survival.
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 European Regional Science Association in its series ERSA conference papers with number ersa10p549.
Date of creation: Sep 2011
Date of revision:
Contact details of provider:
Postal: Welthandelsplatz 1, 1020 Vienna, Austria
Web page: http://www.ersa.org
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-07-29 (All new papers)
- NEP-BEC-2012-07-29 (Business Economics)
- NEP-CSE-2012-07-29 (Economics of Strategic Management)
- NEP-ENT-2012-07-29 (Entrepreneurship)
- NEP-HME-2012-07-29 (Heterodox Microeconomics)
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.:
- R. Paci & S. Usai, 2000.
"Externalities, knowledge spillovers and the spatial distribution of innovation,"
Working Paper CRENoS
200002, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
- Paci, Raffaele & Usai, Stefano, 2000. "Externalities, Knowledge Spillovers And The Spatial Distribution Of Innovation," ERSA conference papers ersa00p104, European Regional Science Association.
- Alessandro STERLACCHINI, 1994.
"The birth of new firms in Italian manufacturing,"
47, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
- Romer, Paul M, 1986.
"Increasing Returns and Long-run Growth,"
Journal of Political Economy,
University of Chicago Press, vol. 94(5), pages 1002-37, October.
- Dolton, Peter J & van der Klaauw, Wilbert, 1995. "Leaving Teaching in the UK: A Duration Analysis," Economic Journal, Royal Economic Society, vol. 105(429), pages 431-44, March.
- Brixy, Udo & Kohaut, Susanne, 1999. " Employment Growth Determinants in New Firms in Eastern Germany," Small Business Economics, Springer, vol. 13(2), pages 155-70, September.
- Honjo, Yuji, 2000. "Business failure of new firms: an empirical analysis using a multiplicative hazards model," International Journal of Industrial Organization, Elsevier, vol. 18(4), pages 557-574, May.
- Glaeser, Edward Ludwig & Kallal, Hedi D. & Scheinkman, Jose A. & Shleifer, Andrei, 1992.
"Growth in Cities,"
3451309, Harvard University Department of Economics.
- Wagner, Joachim, 1994. "The Post-entry Performance of New Small Firms in German Manufacturing Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 42(2), pages 141-54, June.
- Michael Fritsch & Yvonne Schindele, 2011. "The Contribution of New Businesses to Regional Employment—An Empirical Analysis," Economic Geography, Clark University, vol. 87(2), pages 153-180, 04.
- Paul M Romer, 1999.
"Endogenous Technological Change,"
Levine's Working Paper Archive
2135, David K. Levine.
- Guimaraes, Paulo & Mata, José & Portugal, Pedro, 1995.
"The Survival of New Plants: Start-up Conditions and Post-entry Evolution,"
CEPR Discussion Papers
1203, C.E.P.R. Discussion Papers.
- Mata, Jose & Portugal, Pedro & Guimaraes, Paulo, 1995. "The survival of new plants: Start-up conditions and post-entry evolution," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 459-481, December.
- Boyan Jovanovic, 2001. "Fitness and Age: Review of Carroll and Hannan's Demography of Corporations and Industries," Journal of Economic Literature, American Economic Association, vol. 39(1), pages 105-119, March.
- Falck, Oliver, 2005.
"Mayflies and long-distance runners: The effects of new business formation on industry growth,"
Passauer Diskussionspapiere, Volkswirtschaftliche Reihe
V-39-05, University of Passau, Faculty of Business and Economics.
- Oliver Falck, 2007. "Mayflies and long-distance runners: the effects of new business formation on industry growth," Applied Economics Letters, Taylor & Francis Journals, vol. 14(12), pages 919-922.
- Joachim Wagner & Rolf Sternberg, 2004. "Start-up activities, individual characteristics, and the regional milieu: Lessons for entrepreneurship support policies from German micro data," The Annals of Regional Science, Springer, vol. 38(2), pages 219-240, 06.
- David Audretsch & Patrick Houweling & A. Thurik, 2000. "Firm Survival in the Netherlands," Review of Industrial Organization, Springer, vol. 16(1), pages 1-11, February.
- Audretsch, David & Vivarelli, Marco, 1995. "New-firm formation in Italy: A first report," Economics Letters, Elsevier, vol. 48(1), pages 77-81, April.
- Yvonne Schindele, 2010. "How Long Does it Take to Become an Entrepreneurial Society - The Case of German Convergence in Self-Employment," Jena Economic Research Papers 2010-015, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
- Michael Fritsch & Florian Noseleit, 2009.
"Start-ups, Long- and Short-Term Survivors and their Effect on Regional Employment Growth,"
Jena Economic Research Papers
2009-081, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
- Michael Fritsch & Florian Noseleit, 2011. "Start-ups, Long- and Short-Term Survivors and their Effect on Regional Employment Growth," ERSA conference papers ersa10p1102, European Regional Science Association.
- David Audretsch, 2004. "Sustaining Innovation and Growth: Public Policy Support for Entrepreneurship," Industry and Innovation, Taylor & Francis Journals, vol. 11(3), pages 167-191.
- Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 421-440, December.
- Fritsch, Michael, 2004.
"Entrepreneurship, entry and performance of new business compared in two growth regimes: East and West Germany,"
Freiberg Working Papers
2004,09, TU Bergakademie Freiberg, Faculty of Economics and Business Administration.
- Michael Fritsch, 2004. "Entrepreneurship, entry and performance of new business compared in two growth regimes: East and West Germany," Journal of Evolutionary Economics, Springer, vol. 14(5), pages 525-542, December.
- Michael Fritsch, 2004. "Entrepreneurship, Entry and Performance of New Businesses Compared in two Growth Regimes: East and West Germany," Papers on Entrepreneurship, Growth and Public Policy 2004-41, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
- Guy Dumais & Glenn Ellison & Edward Glaeser, 1997.
"Geographic Concentration as a Dynamic Process,"
NBER Working Papers
6270, National Bureau of Economic Research, Inc.
- Boeri, Tito & Bellmann, Lutz, 1995. "Post-entry behaviour and the cycle: Evidence from Germany," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 483-500, December.
- Yvonne Schindele & Antje Weyh, 2011.
"The direct employment effects of new businesses in Germany revisited: an empirical investigation for 1976–2004,"
Small Business Economics,
Springer, vol. 36(3), pages 353-363, April.
- Yvonne Schindele & Antje Weyh, 2008. "The Direct Employment Effects of New Businesses in Germany Revisited - An Empirical Investigation for 1976 - 2004," Jena Economic Research Papers 2008-076, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
- Mata, Jose & Portugal, Pedro, 1994. "Life Duration of New Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 42(3), pages 227-45, September.
- Bradburd, Ralph M & Caves, Richard E, 1982. "A Closer Look at the Effect of Market Growth on Industries' Profits," The Review of Economics and Statistics, MIT Press, vol. 64(4), pages 635-45, November.
- Licht, Georg & Nerlinger, Eric A., 1997.
"New Technology-Based Firms in Germany: A Survey of the Recent Evidence,"
ZEW Discussion Papers
97-18, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Licht, Georg & Nerlinger, Eric, 1998. "New technology-based firms in Germany: a survey of the recent evidence," Research Policy, Elsevier, vol. 26(9), pages 1005-1022, April.
- Spletzer, James R, 2000. "The Contribution of Establishment Births and Deaths to Employment Growth," Journal of Business & Economic Statistics, American Statistical Association, vol. 18(1), pages 113-26, January.
- Griliches, Zvi & Regev, Haim, 1995. "Firm productivity in Israeli industry 1979-1988," Journal of Econometrics, Elsevier, vol. 65(1), pages 175-203, January.
- Marco Vivarelli, 2004. "Are All the Potential Entrepreneurs So Good?," Small Business Economics, Springer, vol. 23(1), pages 41-49, 08.
- David B. Audretsch, 1995. "Innovation and Industry Evolution," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011468, January.
- Fariñas, Jose C. & Ruano, Sonia, 2005. "Firm productivity, heterogeneity, sunk costs and market selection," International Journal of Industrial Organization, Elsevier, vol. 23(7-8), pages 505-534, September.
- Agustí Segarra & Maria Callejón, 2002. "New Firms' Survival and Market Turbulence: New Evidence from Spain," Review of Industrial Organization, Springer, vol. 20(1), pages 1-14, February.
- Michael Fritsch & Antje Weyh, 2006. "How Large are the Direct Employment Effects of New Businesses? An Empirical Investigation for West Germany," Small Business Economics, Springer, vol. 27(2), pages 245-260, October.
- Zoltan J. Acs & Catherine Armington & Ting Zhang, 2007. "The determinants of new-firm survival across regional economies: The role of human capital stock and knowledge spillover," Papers in Regional Science, Wiley Blackwell, vol. 86(3), pages 367-391, 08.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gunther Maier).
If references are entirely missing, you can add them using this form.