Download this Paper Open PDF in Browser

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

48 Pages Posted: 22 Jun 2010 Last revised: 16 Oct 2012

Oliver Falck

CESifo (Center for Economic Studies and Ifo Institute) - Department Human Capital and Innovation

Christina Guenther

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics

Stephan Heblich

University of Stirling - Department of Economics

William R. Kerr

Harvard University - Entrepreneurial Management Unit

Multiple version iconThere are 2 versions of this paper

Date Written: July 1, 2012

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.

Keywords: Agglomeration, competition, firm dynamics, labor, Germany

JEL Classification: R10, L10, H25, O10, J20

Suggested Citation

Falck, Oliver and Guenther, Christina and Heblich, Stephan and Kerr, William R., From Russia with Love: The Impact of Relocated Firms on Incumbent Survival (July 1, 2012). Harvard Business School Entrepreneurial Management Working Paper No. 10-112. Available at SSRN: https://ssrn.com/abstract=1628104 or http://dx.doi.org/10.2139/ssrn.1628104

Oliver Falck

CESifo (Center for Economic Studies and Ifo Institute) - Department Human Capital and Innovation ( email )

Poschingerstr. 5
Munich, 81679
Germany

Christina Guenther

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics ( email )

Kahlaische Strasse 10
D-07745 Jena, 07745
Germany

Stephan Heblich

University of Stirling - Department of Economics ( email )

Stirling, Scotland FK9 4LA
United Kingdom

HOME PAGE: http://www.management.stir.ac.uk/people/economics/academic-staff/dr-stephan-heblich

William R. Kerr (Contact Author)

Harvard University - Entrepreneurial Management Unit ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

Paper statistics

Downloads
54
Rank
296,323
Abstract Views
1,161