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Firms’economic crisis and firm exit: do intangibles matters?

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  • A. Arrighetti
  • F. Landini
  • A. Lasagni

Abstract

The crisis regarding the Euro area has caused several business closures, especially in the periphery of the EMU. In this paper, we use an original Italian firm-level dataset to determine why firms exit the market during times of economic crisis, paying particular attention to the role of intangibles. We argue that intangibles strengthen a firm’s resilience, which improves the firm’s ability to cope with adverse events and unexpected shocks. We obtain two main results: first, we show that the presence of intangibles significantly reduces the probability of firm exit, especially during the initial phase of the crisis; second, we find that financial constraints become more relevant than intangibles in explaining firm exit during the later stages of the crisis. Thus, the process of firm selection during the crisis has undergone a rapid transformation, with distortions that may lead even skilled firms to exit. Implications of these findings for EU recovery policies are discussed.

Suggested Citation

  • 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).
  • Handle: RePEc:par:dipeco:2015-ep04
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    1. Alessandro Arrighetti & Fabio Landini & Andrea Lasagni, 2021. "Swimming upstream throughout the turmoil: Evidence on firm growth during the great recession," Scottish Journal of Political Economy, Scottish Economic Society, vol. 68(3), pages 322-344, July.

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    More about this item

    Keywords

    intangibles; firm exit; EU crisis; industry dynamics;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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