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

  • Falck, Oliver
  • Guenther, Christina
  • Heblich, Stephan
  • Kerr, William R

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 resourc es.

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File URL: http://hdl.handle.net/1893/3235
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Paper provided by University of Stirling, Division of Economics in its series Stirling Economics Discussion Papers with number 2011-17.

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Date of creation: Jul 2011
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Handle: RePEc:stl:stledp:2011-17
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Division of Economics, University of Stirling, Stirling, Scotland FK9 4LA

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Web page: http://www.econ.stir.ac.uk/

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