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

Research output: Contribution to journalArticle

  • Oliver Falck
  • Christina Guenther
  • Stephan Heblich
  • William R. Kerr
Original languageEnglish
Pages (from-to)419-449
Number of pages31
JournalJournal of Economic Geography
Volume13
Issue number3
DOIs
DatePublished - May 2013

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.

    Research areas

  • 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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