From Russia with love: the impact of relocated firms on incumbent survival

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

Research output: Contribution to journalArticle (Academic Journal)

7 Citations (Scopus)

Abstract

We identify the impact of local firm concentration on incumbent performance in a historic setting that has quasi-experimental characteristics. 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 resources.

Original languageEnglish
Pages (from-to)419-449
Number of pages31
JournalJournal of Economic Geography
Volume13
Issue number3
DOIs
Publication statusPublished - May 2013

Keywords

  • Agglomeration
  • competition
  • firm dynamics
  • labor
  • Germany
  • R10
  • L10
  • H25
  • O10
  • J20
  • MACHINE-TOOL INDUSTRY
  • ECONOMIC EXCHANGE
  • AGGLOMERATION
  • DIFFUSION
  • PRODUCTIVITY
  • INNOVATION
  • TRADE
  • ENTREPRENEURSHIP
  • SPECIALIZATION
  • SPILLOVERS

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