Mayflies and long-distance runners: The effects of new business formation on industry growth

This paper analyzes the effects of new business formation on industry growth. Dynamic panel techniques are used to test two hypotheses. First, does hit-andrun competition secure efficiency in an industry? Second, do innovative startups lead to amplified innovations by diminishing the knowledge filter? The results illustrate how new businesses can be viewed as either mayflies or longdistance runners. --Entry and exit,growth,hit-and-run competition,innovation,dynamic panel techniques

Heavyweights – The Impact of Large Businesses on Productivity Growth

The idea of an industrial policy that promotes large businesses—heavyweights—as the best way to compete in a globalized world has become, again, en vogue among European politicians. The only apparent controversy about the idea revolves around whether it is better to promote national champions or, instead, European champions. Empirical evidence on the issue is rare and contradictory. A uniquely rich industry-level dataset for Germany is used in this paper to test whether large business size in an industry fosters growth in terms of total factor productivity (TFP). The results suggest that the overall effects of firm size on TFP growth are negative.firm size, productivity growth, total factor productivity, innovation

New Firm Formation by Industry over Space and Time: A Multi-Level Analysis

Wir untersuchen den Einfluss von Branchenmerkmalen, Standort und Veränderungen im Zeitablauf auf Neugründungen von Betrieben mit einem Mehr- Ebenen-Ansatz. Die Analyse bezieht sich auf Westdeutschland im Zeitraum 1983- 1997. Innovationsaktivitäten und die Ausprägung des technologischen Regimes haben offenbar einen wesentlichen Einfluss auf Gründungsaktivitäten. Es bestehen erhebliche Unterschiede zwischen dem Industrie- und dem Dienstleistungssektor hinsichtlich der Bedeutung der verschiedenen Faktoren für das Gründungsgeschehen. Expandierende Nachfrage stimuliert Gründungsaktivitäten während sich ein hohes Niveau an regionaler Arbeitslosigkeit offenbar ungünstig auswirkt. We apply a multi-level approach to analyze simultaneously the effects of three groups of determinants on new firm formation: industry, location and change over time. The data is for West Germany and covers the 1983-97 period. Our analysis indicates that innovation activities and the technological regime play a significant role in new firm formation processes. There are some differences with regard to the impact of a number of variables on start-ups in manufacturing and the service sector. Changes in demand are conducive to new firm formation while a high level of unemployment in a region obviously creates a relatively uncomfortable environment for setting up new businesses.New firm formation, industrial economics, regional economics, entrepreneurship

New firm formation by industry over space and time: a multi-level analysis for Germany

We apply a multi-level approach to analyze the effect of three groups of determinants on new firm formation simultaneously: industry, location and changes over time. The data are for West Germany and cover the 1983-97 period. Our analysis indicates, that innovation activities and the technological regime play a significant role for new firm formation processes. There are also considerable differences with regard to the impact of a number of variables on startups between manufacturing and the service sector. Changes in demand are conducive for new firm formation while a high level of unemployment in a region obviously makes a relatively uncomfortable environment for start-ups. JEL classification: D21, L10, R10 Keywords: New firm formation, industrial economics, regional economics, entrepreneurship.

School Competition and Students' Entrepreneurial Intentions: International Evidence Using Historical Catholic Roots of Private Schooling

School choice research mostly focuses on academic outcomes. Policymakers increasingly view entrepreneurial traits as a non-cognitive outcome important for economic growth. We use international PISA-2006 student-level data to estimate the effect of private-school competition on students’ entrepreneurial intentions. We exploit Catholic-Church resistance to state schooling in 19th century as a natural experiment to obtain exogenous variation in current private-school shares. Our instrumental-variable results suggest that a 10 percentage-point higher private-school share raises students’ entrepreneurial intentions by 0.3-0.5 percentage points (11-18 percent of the international mean) even after controlling for current Catholic shares, students’ academic skills, and parents’ entrepreneurial occupation.private school competition, entrepreneurship, Catholic schools

Dynamic Clusters

Globalization has had an enormous impact on traditional industrial structures. It seems almost the case that everything is everywhere the same. And yet, in reality, some regions in a single industrialized country enjoy rapid economic growth while others are downsizing or stagnating. Thus there must be some remaining regional competitive advantages—even in the “Age of Globalization.” This paper engages in a quest to discover what these new “locational” factors might be and how and why they are necessary in creating a dynamic cluster of regional growth. In doing so, we try to link agglomeration advantages of the new economic geography with competitive advantages of Porter’s cluster theory. But we also go beyond these approaches and add further regional growth factors such as creativity or diversity. Using data that paint a comprehensive picture of industry and regional development in Germany we try to find empirical evidence for our approach. A case study from the automobile industry – one of the leading industries in Germany – completes our picture of dynamic clusters.Cluster, Regional Growth, Innovation, Creativity

School Competition and Students' Entrepreneurial Intentions: International Evidence Using Historical Catholic Roots of Private Schooling

School choice research mostly focuses on academic outcomes. Policymakers increasingly view entrepreneurial traits as a non-cognitive outcome important for economic growth. We use international PISA-2006 student-level data to estimate the effect of private-school competition on students' entrepreneurial intentions. We exploit Catholic-Church resistance to state schooling in 19th century as a natural experiment to obtain exogenous variation in current private-school shares. Our instrumental-variable results suggest that a 10 percentage-point higher private-school share raises students' entrepreneurial intentions by 0.3-0.5 percentage points (11-18 percent of the international mean) even after controlling for current Catholic shares, students' academic skills, and parents' entrepreneurial occupation.private school competition, entrepreneurship, Catholic schools

Forced Migration and the Effects of an Integration Policy in Post-WWII Germany.

After World War II, about 8 million ethnic Germans — so called expellees — were forced to leave their homelands and settle within the new borders of West Germany. Subsequently, a law (Federal Expellee Law) was introduced to foster their labor market integration. We evaluate this law by comparing the employment situation between expellees and groups of West Germans and GDR refugees over time. We define our comparison groups to uncover even small effects of the law. Still, we find no evidence that the law met its goal to foster the expellees’ labor market integration

The Strength of Direct Ties: Evidence from the Electronic Game Industry

We analyze the economic effects of a developer’s connectedness in the electronic game industry. Knowledge spillovers between developers should be of special relevance in this knowledge-based industry. We calculate measures for a developer’s connectedness to other developers at multiple points in time. In a regression with developer, developing firm, publishing firm, and time fixed effects, we find that the number of a developer’s direct ties, i.e., common past experience, has a strong effect on both a game’s revenues and critics’ scores. The intensity of indirect ties makes no additional contribution to the game’s success

Subsidizing National Champions: An Evolutionary Perspective

A national-champions-related industrial policy has become (again) en vogue among European politicians. Against this background, our work orders different types of national champions along the industry lifecycle. Different types of locally bound externalities appear along the lifecycle. In a simple model, we show that it may be efficient to subsidize innovative firms in their early stages or to protect mature firms from competition to appropriate these externalities. However, non-benevolent politicians may not choose efficient policies. Real-world examples indicate that politicians tend to concentrate on externalities at the mature stage of the lifecycle. These externalities may be transitory or at the expense of foreign country consumers.national champions, industrial policy, industry lifecycle, externalities