What Characterizes a Fast Growing Firm?

This paper seeks to empirically identify factors that influence the probability of beinga fast growingfirm in Eastern and Western Germany. Descriptive analyses have shown that most firms experience only small positive or negative employment growth or stagnate over time. The job generation mechanism rests with a handful of firms that increase their employment significantly over time. The empirical analysis shows that the probability of beinga fast growingfirm depends on different factors when separatingEastern and Western Germany as well as usingdifferen t definitions of fast growingfirms. Moreover, the analysis shows that technology-intensive manufacturing branches and knowledge based business related services do not generate the majority of fast growing firms. --New Firms,Fast Employment Growth,Technology orientation

Evaluating the Impact of Public Start-up Assistance – Results from an Econometric Approach

This paper analyzes the medium-term growth performance of firms that exclusively received start-up assistance from programs administered by the Deutsche Ausgleichsbank (DtA), a state owned bank, within two years after startup. I apply a parametric selection approach that controls for two potential sources of self selection (receipt of assistance, complete interview data). The empirical analysis shows that firms receiving assistance perform better in terms of employment growth over a six year period

The effects of public R&D subsidies on firms' innovation activities: the case of Eastern Germany

This study analyzes the effects of public R&D policy schemes on the innovation activities of firms located in Eastern Germany. The main question in this context is whether public funds stimulate R&D activities or simply crowd out privately financed R&D. Empirically, we investigate the average causal effects of all public R&D schemes in Eastern Germany using a non?parametric matching approach. Compared to the case where no public financial means are provided, it turns out that firms increase their innovation activities by about four percentage points. --Public Innovation Subsidies,Non?parametric Matching

What Characterizes a Fast Growing Firm?

This paper seeks to empirically identify factors that influence the probability of being a fast growing firm in Eastern and Western Germany. Descriptive analyses have shown that most firms experience only small positive or negative employment growth or stagnate over time. The job generation mechanism rests with a handful of firms that increase their employment significantly over time. The empirical analysis shows that the probability of being a fast growing firm depends on different factors when separating Eastern and Western Germany as well as using different definitions of fast growing firms. Moreover, the analysis shows that technology-intensive manufacturing branches and knowledge based business related services do not generate the majority of fast growing firms

Zum Zusammenhang zwischen Größe und Wachstum bei Gründungen - Empirische Ergebnisse für West-Deutschland

The present paper deals with the question whether 'Gibrat's law' is applicable to firms founded between 1989 and 1996 within the Western German manufacturing sector or not. The underlying assumption is that size of a firm has no in uence on its growth. Growth is rather determined by a process of random in uences. Within the context of the econometric analyses conducted in the present study, firms are subdivided into innovative and non-innovative young firms. A method introduced in Chesher (1979) is used to explore 'Gibrat's law' in order to examine the influence of firm size on growth. Moreover we test whether the growth process of firms remains stable over time or not. This so-called 'persistence of growth'-hypothesis implies that growth in one period has an impact on growth in the following period. Using data from the ZEW-Foundation Panel (West), 'Gibrat's law' is rejected for the group of innovative as well as for the group of non-innovative young firms in all periods examined. This confirms the results of a number of empirical studies over the last years, indicating that smaller firms have larger growth potential than larger ones. --Young Innovative Firms,New Technology-based Firms (NTBFs),Employment Growth,Gibrat's Law

The Shadow of Death: An Empirical Analysis of the Pre-Exit Performance of Young German Firms

This paper makes an empirical contribution to confirm the stylized fact that the performance of firms deteoriates in the years before exit. For this reason we evaluate whether market exits differ significantly in their employment development in the years before market drop-out compared to surviving firms that have been selected using a non-parametric matching approach. The matching approach allows to find a surviving firm for every market exit that does not differ in important characteristics measured at start-up. The comparison of the employment growth rates among the thus formed groups reveals that the matched surviving firms experience higher growth rates compared to their exiting counterparts up to three years before market exit. Moreover, we find support for the phenomenon called "shadow of death" sneaking around the corner. A considerable number of firms exiting from 1995 until 1998 has experienced continuing employment losses or at least an employment stagnation over several years before market exit

The shadow of death: an empirical analysis of the pre-exit performance of young German firms

This paper makes an empirical contribution to confirm the stylized fact that the performance of firms deteoriates in the years before exit. For this reason we evaluate whether market exits differ significantly in their employment development in the years before market drop-out compared to surviving firms that have been selected using a non-parametric matching approach. The matching approach allows to find a surviving firm for every market exit that does not differ in important characteristics measured at start-up. The comparison of the employment growth rates among the thus formed groups reveals that the matched surviving firms experience higher growth rates compared to their exiting counterparts up to three years before market exit. Moreover, we find support for the phenomenon called \shadow of death" sneaking around the corner. A considerable number of firms exiting from 1995 until 1998 has experienced continuing employment losses or at least an employment stagnation over several years before market exit. --New Firms,Employment Growth,Evaluation,Non-Parametric Matching

Die Auswirkungen öffentlicher Gründungsförderung auf das Überleben und Wachstum junger Unternehmen

Die Deutsche Ausgleichsbank (DtA) stellt mit den von ihr angebotenen Programmen zur Unterstützung und Finanzierung von Existenz- und Unternehmensgründungen mehr als 80 Prozent der in Deutschland in diesem Bereich vergebenen Mittel bereit. Der Erfolg dieser Programme wurde schon in einigen Studien analysiert. Im Rahmen der vorliegenden Studie wird ein neues statistisches Evaluationsverfahren eingesetzt, das es ermöglicht, einige methodische Probleme der bislang verwendeten Analyseverfahren zu vermeiden. Das zentrale Element der Evaluationsmethode besteht darin, durch den Einsatz ökonometrischer Verfahren eine adäquat an die Untersuchungsgruppe angepasste Kontrollgruppe zu bestimmen und diese zur Evaluierung des Fördererfolges heranzuziehen. Ziel der vorliegenden Studie ist es zu untersuchen, ob die gewährten Fördermittel einen spürbaren Effekt auf die Unternehmensentwicklung haben oder ob beobachtbare Unterschiede zwischen geförderten und nicht geförderten Unternehmen vor allem auf die Auswahl bestimmter Unternehmensgruppen für Fördermaßnahmen zurückgeht

Zum Zusammenhang zwischen Größe und Wachstum bei Gründungen - Empirische Ergebnisse für West-Deutschland

Wachsen kleine Unternehmen schneller als große hinsichtlich ihrer Beschäftigtenzahl? Trifft dies zu, so könnte sich z.B. eine spezielle Förderung dieser Unternehmen in Form von Subventionen, Bereitstellung von zusätzlichem Risikokapital, Beratungsleistungen zu geringen oder keinen Kosten (vgl. Wagner 1992) positiv auf den derzeit angespannten Arbeitsmarkt auswirken. Besonderes Augenmerk sollte dabei auf die Gruppe technologieorientierter Unternehmensgründungen (TOU) gelegt werden. In zahlreichen empirischen Analysen konnte gezeigt werden, daß TOU im Vergleich zu sonstigen Unternehmensgründungen des Verarbeitenden Gewerbes überdurchschnittliche Wachstumsraten verzeichnen (vgl. Oakey 1993, Licht und Nerlinger 1998, Storey und Tether 1998). Der neue Aspekt dieser Untersuchung besteht in der Fokussierung auf junge Unternehmen, die nicht älter als fünf Jahre sind und nach Wissen der Autoren bisher noch nicht Ziel dieser Art von Analysen waren. Weiterhin wird eine Differenzierung zwischen TOU und nicht-technologieorientierten Unternehmensgründungen vorgenommen. Somit können Aussagen zu Unterschieden im Wachstumsverhalten dieser beiden Unternehmensgruppen gemacht werden. Ob die angesprochenen unterschiedlichen Wachstumspotentiale zum Teil mit "Gibrat's law" zu erklären sind, soll im Rahmen dieser Arbeit beleuchtet werde

Growth determinants of start-ups in Eastern Germany: a comparison between innovative and non-innovative firms

This empirical analysis deals with the determinants of growth and the explanation of variations in the growth between innovative and non-innovative start-ups. Based on theoretical models explaining the growth of firms, hypotheses on potential determinants are formulated. The regression results indicate strong correlations between the growth rate on the one side and firmspecific, founder-specific as well as external factors on the other side. These factors influence the growth rates of innovative and non-innovative young firms in different ways. It becomes obvious that large and mature firms have smaller growth rates than small and young innovative as well as non-innovative firms. Moreover, other firm-specific characteristics like legal form and formal links to other firms from Western industrialised countries have an impact on the development of start-ups. With respect to founder-specific characteristics, positive effects can be derived from the human capital of the founder(s). This holds especially for technological disciplines whereas business knowledge plays a minor role. In addition to firm and founder characteristics, locationspecific factors controlling for agglomeration effects and the industry structure in the Eastern German counties have an impact on growth. Comparing annual growth rates of start-ups, innovative start-ups grow on average faster than non-innovative start-ups. --New Technology-based Firms,Employment Growth,Determinants of Growth