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Firm Resilience During Long-Term Economic Stagnation: Register-Based Analysis of Finnish Manufacturing Firms

Author

Listed:
  • Jyrki Ali-Yrkkö

    (ETLA Economic Research)

  • Natalia Kuosmanen

    (ETLA Economic Research)

  • Mika Pajarinen

    (ETLA Economic Research)

  • Ilkka Ylhäinen

    (ETLA Economic Research)

Abstract

Economic resilience, the ability of firms to withstand and recover from economic challenges, has traditionally been studied in response to short-term crises. However, prolonged economic stagnation presents persistent constraints that require firms to adopt various resilience strategies. This study examines the resilience of Finnish manufacturing firms from 2005 to 2021, focusing on the extended downturn following the 2008 financial crisis. We assess firm resilience using detailed administrative data from official registers, focusing on three key measures: firm continuity (the ability to remain operational), revenue drop severity (the magnitude of revenue decline), and rebound time (the speed of revenue recovery). Our findings highlight the critical roles of innovation, financial stability, and diversification strategies in shaping firm resilience. While innovation and financial strength consistently reduce exit risks and accelerate recovery, diversification has a nuanced impact. Product and industry diversification help mitigate revenue losses and speed up recovery, but have limited influence on survival. These insights underscore the importance of adaptive strategies to sustain firms through prolonged downturns and dynamic market conditions.

Suggested Citation

  • Jyrki Ali-Yrkkö & Natalia Kuosmanen & Mika Pajarinen & Ilkka Ylhäinen, 2025. "Firm Resilience During Long-Term Economic Stagnation: Register-Based Analysis of Finnish Manufacturing Firms," Journal of Industry, Competition and Trade, Springer, vol. 25(1), pages 1-25, December.
    • Handle: RePEc:kap:jincot:v:25:y:2025:i:1:d:10.1007_s10842-025-00450-z
    DOI: 10.1007/s10842-025-00450-z
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    Keywords

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    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G01 - Financial Economics - - General - - - Financial Crises
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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