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Risk or Resilience? The Role of Trade Integration and Foreign Ownership for the Survival of German Enterprises during the Crisis 2008-2010

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  • Wagner, Joachim

    (Leuphana University Luneburg & Centre of Excellence for Science (CESIS))

  • Gelübcke, John P. Weche

    (Leuphana University Luneburg, Germany)

Abstract

This is the first study of the link between internationalization and firm survival during the 2008/2009 crisis in Germany, a country which was hit relatively lightly compared to other countries. Moreover, it is the first study which looks at the role of importing, exporting and FDI simultaneously in the context of a global economic recession. We use a tailor-made representative dataset that covers all enterprises from the manufacturing sector with at least 20 employees. Our most striking result is to demonstrate the disadvantage of exporting for the chances of survival of a firm during the crisis in western Germany. Importing instead reveals a positive correlation with survival and firms that both export and import do not show a different exit risk relative to non-traders. A plausible explanation is that in a global recession, deteriorating markets abroad cause demand losses for exporters and improved conditions on factor markets which result in an advantage for firms sourcing from factor markets abroad. Two-way traders do not show a link with exit risk, supporting the idea that they were able to outweigh their losses from exporting with their gains from importing, in what could be called an export{import hedge. Furthermore, we cannot support the hypothesis that foreign multinationals are more volatile during times of economic crisis.

Suggested Citation

  • Wagner, Joachim & Gelübcke, John P. Weche, 2013. "Risk or Resilience? The Role of Trade Integration and Foreign Ownership for the Survival of German Enterprises during the Crisis 2008-2010," Working Paper Series in Economics and Institutions of Innovation 340, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  • Handle: RePEc:hhs:cesisp:0340
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    References listed on IDEAS

    as
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    Cited by:

    1. Michael Moritz & Bastian Stockinger & Merlind Trepesch, 2017. "Multinational Resilience or Dispensable Jobs? German FDI and Employment in the Czech Republic Around the Great Recession," Prague Economic Papers, Prague University of Economics and Business, vol. 2017(3), pages 345-359.
    2. Díaz-Mora, Carmen & Córcoles, David & Gandoy, Rosario, 2015. "Exit from exporting: Does being a two-way trader matter?," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 9, pages 1-27.
    3. René Söllner & Sandra Jung, 2017. "The impact of foreign trade and ownership on enterprise exits: new insights through micro data linking," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer;Deutsche Statistische Gesellschaft - German Statistical Society, vol. 11(1), pages 8-32, April.
    4. Jacob A. Jordaan, 2023. "Firm‐level characteristics and the impact of COVID‐19: Examining the effects of foreign ownership and international trade," The World Economy, Wiley Blackwell, vol. 46(7), pages 1967-1998, July.
    5. Magdalena Śliwińska & Rafał Śliwiński, 2017. "International Development of German Enterprises on the example of the Wielkopolska Region," Entrepreneurial Business and Economics Review, Centre for Strategic and International Entrepreneurship at the Cracow University of Economics., vol. 5(2), pages 211-226.
    6. A. Arrighetti & F. Landini & A. Lasagni, 2015. "Firms’economic crisis and firm exit: do intangibles matters?," Economics Department Working Papers 2015-EP04, Department of Economics, Parma University (Italy).

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    More about this item

    Keywords

    ageing; firm survival; employer-employee matched data;
    All these keywords.

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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