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Economic Crisis and Firm Exit: Do Intangibles Matter?

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  • Landini, Fabio

    (LUISS School of European Political Economy)

  • Arrighetti, Alessandro

    (University of Parma, Department of Economics)

  • Lasagni, Andrea

    (University of Parma, Department of Economics)

Abstract

The crisis in the Euro area has caused several business closures, especially in the EMU periphery. In this paper we use an original firm-level dataset on Italy to study the determinants of firm exit during the crisis, having a particular focus on the role of intangibles. We argue that intangibles strengthen the firm’s resilience capacity, and this in turn improves the firms’ ability to cope with adverse and unexpected shocks. We obtain two main results: first we show that intangibles significantly reduce 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 at 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. Some of the implications of these findings for the EU recovery policies are discussed.

Suggested Citation

  • Landini, Fabio & Arrighetti, Alessandro & Lasagni, Andrea, 2015. "Economic Crisis and Firm Exit: Do Intangibles Matter?," SEP Working Papers 2015/10, LUISS School of European Political Economy.
  • Handle: RePEc:ris:sepewp:2015_010
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    Cited by:

    1. Marco Grazzi & Chiara Piccardo & Cecilia Vergari, 2022. "Turmoil over the crisis: innovation capabilities and firm exit," Small Business Economics, Springer, vol. 59(2), pages 537-564, August.
    2. Lara Abdel Fattah & Giuseppe Arcuri & Aziza Garsaa & Nadine Levratto, 2020. "Firm financial soundness and knowledge externalities: A comparative regional analysis," Papers in Regional Science, Wiley Blackwell, vol. 99(5), pages 1459-1486, October.
    3. Biswajit Banerjee & Jelena Ćirjaković, 2021. "Firm Indebtedness, Deleveraging, and Exit: The Experience of Slovenia during the Financial Crisis, 2008–2014," Eastern European Economics, Taylor & Francis Journals, vol. 59(6), pages 537-570, November.
    4. Eleonora Bartoloni & Alessandro Arrighetti & Fabio Landini, 2021. "Recession and firm survival: is selection based on cleansing or skill accumulation?," Small Business Economics, Springer, vol. 57(4), pages 1893-1914, December.
    5. Sara C. Santos Cruz & Aurora A. C. Teixeira, 2021. "Spatial analysis of new firm formation in creative industries before and during the world economic crisis," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 67(2), pages 385-413, October.
    6. Beniamino Pisicoli, 2021. "Banking Diversity, Financial Complexity and Resilience to Financial Shocks: Evidence From Italian Provinces," CEIS Research Paper 526, Tor Vergata University, CEIS, revised 09 Nov 2021.
    7. 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.
    8. Masatoshi Kato & Koichiro Onishi & Yuji Honjo, 2022. "Does patenting always help new firm survival? Understanding heterogeneity among exit routes," Small Business Economics, Springer, vol. 59(2), pages 449-475, August.

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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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