IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

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

Listed author(s):
  • Oliver Falck
  • Christina Guenther
  • Stephan Heblich
  • William R. Kerr

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 resources.

If 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.

File URL: http://www.spatialeconomics.ac.uk/textonly/SERC/publications/download/sercdp0088.pdf
Download Restriction: no

Paper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0088.

as
in new window

Length:
Date of creation: Aug 2011
Handle: RePEc:cep:sercdp:0088
Contact details of provider: Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp

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.:

as
in new window


  1. Richter, Ralf & Streb, Jochen, 2011. "Catching-Up and Falling Behind: Knowledge Spillover from American to German Machine Toolmakers," The Journal of Economic History, Cambridge University Press, vol. 71(04), pages 1006-1031, December.
  2. William R. Kerr & Scott Duke Kominers, 2015. "Agglomerative Forces and Cluster Shapes," The Review of Economics and Statistics, MIT Press, vol. 97(4), pages 877-899, October.
  3. Kirsten Labuske & Jochen Streb, 2008. "Technological Creativity and Cheap Labour? Explaining the Growing International Competitiveness of German Mechanical Engineering before World War I," German Economic Review, Verein für Socialpolitik, vol. 9, pages 65-86, 02.
  4. Falck, Oliver & Heblich, Stephan & Lameli, Alfred & Südekum, Jens, 2012. "Dialects, cultural identity, and economic exchange," Journal of Urban Economics, Elsevier, vol. 72(2), pages 225-239.
  5. Bruce Fallick & Charles A. Fleischman & James B. Rebitzer, 2006. "Job-Hopping in Silicon Valley: Some Evidence Concerning the Microfoundations of a High-Technology Cluster," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 472-481, August.
  6. Falck, Oliver & Heblich, Stephan & Kipar, Stefan, 2010. "Industrial innovation: Direct evidence from a cluster-oriented policy," Regional Science and Urban Economics, Elsevier, vol. 40(6), pages 574-582, November.
  7. Diamond, Charles A & Simon, Curtis J, 1990. "Industrial Specialization and the Returns to Labor," Journal of Labor Economics, University of Chicago Press, vol. 8(2), pages 175-201, April.
  8. Gilles Duranton & Henry G. Overman, 2005. "Testing for Localization Using Micro-Geographic Data," Review of Economic Studies, Oxford University Press, vol. 72(4), pages 1077-1106.
  9. Glaeser, Edward L. & Kerr, William R. & Ponzetto, Giacomo A.M., 2010. "Clusters of entrepreneurship," Journal of Urban Economics, Elsevier, vol. 67(1), pages 150-168, January.
  10. Delgado, Mercedes & Porter, Michael E. & Stern, Scott, 2014. "Clusters, convergence, and economic performance," Research Policy, Elsevier, vol. 43(10), pages 1785-1799.
  11. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2009. "Cultural Biases in Economic Exchange?," The Quarterly Journal of Economics, Oxford University Press, vol. 124(3), pages 1095-1131.
  12. Shihe Fu & Stephen L. Ross, 2013. "Wage Premia in Employment Clusters: How Important Is Worker Heterogeneity?," Journal of Labor Economics, University of Chicago Press, vol. 31(2), pages 271-304.
  13. April Mitchell Franco & Darren Filson, 2000. "Knowledge Diffusion through Employee Mobility," Claremont Colleges Working Papers 2000-61, Claremont Colleges.
  14. Rotemberg, Julio J. & Saloner, Garth, 2000. "Competition and human capital accumulation: a theory of interregional specialization and trade," Regional Science and Urban Economics, Elsevier, vol. 30(4), pages 373-404, July.
  15. Edward P. Lazear, 1999. "Culture and Language," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages 95-126, December.
  16. Glenn Ellison & Edward L. Glaeser & William R. Kerr, 2010. "What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns," American Economic Review, American Economic Association, vol. 100(3), pages 1195-1213, June.
  17. April Mitchell Franco & Darren Filson, 2006. "Spin‐outs: knowledge diffusion through employee mobility," RAND Journal of Economics, RAND Corporation, vol. 37(4), pages 841-860, December.
  18. repec:rje:randje:v:37:y:2006:i:4:p:861-886 is not listed on IDEAS
  19. Enrico Spolaore & Romain Wacziarg, 2009. "The Diffusion of Development," The Quarterly Journal of Economics, Oxford University Press, vol. 124(2), pages 469-529.
  20. Glaeser, Edward L., 2008. "Cities, Agglomeration, and Spatial Equilibrium," OUP Catalogue, Oxford University Press, number 9780199290444.
  21. Michael Greenstone & Richard Hornbeck & Enrico Moretti, 2010. "Identifying Agglomeration Spillovers: Evidence from Winners and Losers of Large Plant Openings," Journal of Political Economy, University of Chicago Press, vol. 118(3), pages 536-598, 06.
  22. Thomas J. Holmes, 2010. "Structural, Experimentalist, And Descriptive Approaches To Empirical Work In Regional Economics," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 5-22.
  23. Mazzoleni, Roberto, 1997. "Learning and path-dependence in the diffusion of innovations: comparative evidence on numerically controlled machine tools," Research Policy, Elsevier, vol. 26(4-5), pages 405-428, December.
  24. Shihe Fu & Stephen L. Ross, 2007. "Wage Premia in Employment Clusters: Does Worker Sorting Bias Estimates?," Working papers 2007-26, University of Connecticut, Department of Economics, revised Dec 2009.
  25. repec:rje:randje:v:37:y:2006:i:4:p:841-860 is not listed on IDEAS
  26. William R. Kerr, 2008. "Ethnic Scientific Communities and International Technology Diffusion," The Review of Economics and Statistics, MIT Press, vol. 90(3), pages 518-537, August.
  27. Stuart S. Rosenthal & William C. Strange, 2003. "Geography, Industrial Organization, and Agglomeration," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 377-393, May.
  28. Edward L. Glaeser & William R. Kerr, 2009. "Local Industrial Conditions and Entrepreneurship: How Much of the Spatial Distribution Can We Explain?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(3), pages 623-663, 09.
  29. Guido Buenstorf & Christina Guenther, 2011. "No place like home? Relocation, capabilities, and firm survival in the German machine tool industry after World War II," Industrial and Corporate Change, Oxford University Press, vol. 20(1), pages 1-28, February.
  30. Duranton, Gilles & Puga, Diego, 2004. "Micro-foundations of urban agglomeration economies," Handbook of Regional and Urban Economics,in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 48, pages 2063-2117 Elsevier.
  31. Mohammad Arzaghi & J. Vernon Henderson, 2008. "Networking off Madison Avenue," Review of Economic Studies, Oxford University Press, vol. 75(4), pages 1011-1038.
  32. Falck, Oliver & Heblich, Stephan & Link, Susanne, 2011. "The Evils of Forced Migration: Do Integration Policies Alleviate Migrants' Economic Situations?," IZA Discussion Papers 5829, Institute for the Study of Labor (IZA).
  33. Daniel Kahneman & Jack L. Knetsch & Richard H. Thaler, 1991. "Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 193-206, Winter.
  34. Griliches, Zvi & Regev, Haim, 1995. "Firm productivity in Israeli industry 1979-1988," Journal of Econometrics, Elsevier, vol. 65(1), pages 175-203, January.
  35. Shihe Fu & Stephen L. Ross, 2010. "Wage Premia in Employment Clusters: Agglomeration or Worker Heterogeneity?," Working Papers 10-04, Center for Economic Studies, U.S. Census Bureau.
  36. Thomas J. Holmes & John J. Stevens, 2002. "Geographic Concentration and Establishment Scale," The Review of Economics and Statistics, MIT Press, vol. 84(4), pages 682-690, November.
  37. Rosenthal, Stuart S. & Strange, William C., 2001. "The Determinants of Agglomeration," Journal of Urban Economics, Elsevier, vol. 50(2), pages 191-229, September.
  38. Rosenthal, Stuart S. & Strange, William C., 2004. "Evidence on the nature and sources of agglomeration economies," Handbook of Regional and Urban Economics,in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 49, pages 2119-2171 Elsevier.
  39. Lee, Kong Rae, 1996. "The role of user firms in the innovation of machine tools: The Japanese case," Research Policy, Elsevier, vol. 25(4), pages 491-507, June.
  40. James E. Rauch & Vitor Trindade, 2002. "Ethnic Chinese Networks In International Trade," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 116-130, February.
  41. Carlo Menon, 2008. "The Bright Side of MAUP: an Enquiry on the Determinants of Industrial Agglomeration in the United States," Working Papers 2008_29, Department of Economics, University of Venice "Ca' Foscari".
  42. Steven Klepper & Peter Thompson, 2006. "Submarkets and the evolution of market structure," RAND Journal of Economics, RAND Corporation, vol. 37(4), pages 861-886, December.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:cep:sercdp:0088. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.