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

36 Pages Posted: 29 Jun 2010 Last revised: 29 Oct 2014

See all articles by Oliver Falck

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 Kerr

Harvard University - Entrepreneurial Management Unit

Multiple version iconThere are 2 versions of this paper

Date Written: June 2010

Abstract

We identify the impact of local firm concentration on incumbent performance with a quasi natural experiment. 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.

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 (June 2010). NBER Working Paper No. w16141. Available at SSRN: https://ssrn.com/abstract=1630146

Oliver Falck (Contact Author)

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

Harvard University - Entrepreneurial Management Unit ( email )

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

Register to save articles to
your library

Register

Paper statistics

Downloads
12
Abstract Views
567
PlumX Metrics