Does Export Openness Increase Firm-level Output Volatility?
Claudia M. Buch, Jörg Döpke, H. Strotmann
World Economy,
No. 4,
2009
Abstract
There is a widespread concern that increased trade may lead to increased instability and thus risk at the firm level. Greater export openness can indeed affect firm-level volatility by changing the exposure and the reaction of firms to macroeconomic developments. The net effect is ambiguous from a theoretical point of view. This paper provides firm-level evidence on the link between openness and volatility. Using comprehensive data on more than 21,000 German manufacturing firms for the period 1980–2001, we analyse the evolution of firm-level output volatility and the link between volatility and export openness. Our paper has three main findings. First, firm-level output volatility is significantly higher than the level of aggregate volatility, but it displays similar patterns. Second, increased export openness lowers firm-level output volatility. This effect is primarily driven by variations along the extensive margin, i.e. by the distinction between exporters and non-exporters. Variations along the intensive margin, i.e. the volume of exports, tend to have a dampening impact on volatility as well. Third, small firms are more volatile than large firms.
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Why Do Payday Lenders Enter Local Markets? Evidence from Oregon
H. Evren Damar
Review of Industrial Organization,
No. 2,
2009
Abstract
This study analyzes payday lenders’ entry strategies in the state of Oregon in order to look for changes in the nature of the industry and its relationship to traditional financial institutions. The results of fixed-effects logit regressions suggest that payday lenders have started to enter areas already being served by banks. Furthermore, the presence of “incumbent advantage” in entry decisions may also have implications concerning the level of competition in the industry. Finally, since payday lenders also enter areas with large Hispanic populations, it is still possible that payday loans represent the sole source of credit for certain segments of the population.
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Professor Qualities and Student Achievement
Florian Hoffmann, Philip Oreopoulos
Review of Economics and Statistics,
No. 1,
2009
Abstract
This paper analyzes the importance of teacher quality at the college level. Instructors are matched to objective and subjective characteristics of teacher quality to estimate the impact of rank, salary, and perceived effectiveness on student performance and subject interest. Student and course fixed effects, time of day and week controls, and students' lack of knowledge about first-year instructors help minimize selection biases. Subjective teacher evaluations perform well in measuring instructor influences on students, while objective characteristics such as rank and salary do not. Overall, the importance of college instructor differences is small, but important outliers exist.
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A Novel Approach to Incubator Evaluations: The PROMETHEE Outranking Procedures
Michael Schwartz, Maximilian Göthner
IWH Discussion Papers,
No. 1,
2009
Abstract
Considerable public resources are devoted to the establishment and operation of business incubators (BIs), which are seen as catalysts for the promotion of entrepreneurship, innovation activities and regional development. Despite the vast amount of research that has focused on the outcomes or effectiveness of incubator initiatives and how to measure incubator performance, there is still little understanding of how to determine incubators that are more effective than others. Based on data from 410 graduate firms, this paper applies the multi-criteria outranking technique PROMETHEE (Preference Ranking Organization Method for Enrichment Evaluation) and compares the long-term effectiveness of five technology-oriented BIs in Germany. This is the first time that outranking procedures are used in incubator evaluations. In particular, we investigate whether PROMETHEE is a well-suited methodological approach for the evaluation and comparisons in the specific context of business incubation.
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A Lesson Learned? Pre- and Post-Crisis Entry Decisions in Turkish Banking
H. Evren Damar
Contemporary Economic Policy,
No. 1,
2009
Abstract
This study looks at the determinants of entry by Turkish banks into local markets during the periods before and after the crisis of 2000–2001. Motivated by a theoretical model of entry, results of fixed-effects logit regressions suggest that there has been a change in the geographical diversification strategies of Turkish banks. It appears that the dominance of strategic concerns, such as competing with banks of similar size, has diminished, while economic concerns, such as incumbent characteristics and cost considerations, have become more important. Overall, the postcrisis restructuring policies seem to have led to improved decision making in the sector.
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The Euro and the Competitiveness of European Firms
Filippo di Mauro, Gianmarco Ottaviano, Daria Taglioni
Economic Policy,
No. 57,
2009
Abstract
Much attention has been paid to the impact of a single currency on actual trade volumes. Lower trade costs, however, matter over and beyond their effects on trade flows: as less productive firms are forced out of business by the tougher competitive conditions of international markets, economic integration fosters lower prices and higher average productivity. We assess the quantitative relevance of these effects calibrating a general equilibrium model using country, sector and firm-level empirical observations. The euro turns out to have increased the overall competitiveness of Eurozone firms, and the effects differ along interesting dimensions: they tend to be stronger for countries which are smaller or with better access to foreign markets, and for firms which specialize in sectors where international competition is fiercer and barriers to entry lower.— Gianmarco I.P. Ottaviano, Daria Taglioni and Filippo di Mauro
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Growth, Volatility, and Credit Market Imperfections: Evidence from German Firms
Claudia M. Buch, Jörg Döpke
Journal of Economic Studies,
2008
Abstract
Purpose – The purpose of this paper is two-fold. First, it studies whether output volatility and growth are linked at the firm-level, using data for German firms. Second, it explores whether the link between volatility and growth depends on the degree of credit market imperfections.
Design/methodology/approach – The authors use a novel firm-level dataset provided by the Deutsche Bundesbank, the so-called Financial Statements Data Pool. The dataset has time series observations for German firms for the period 1997-2004, and the authors use information on the debt-to-assets or leverage ratio of firms to proxy for credit-constraints at the firm-level. As additional proxies for the importance of credit market imperfections, we use information on the size and on the legal status of firms.
Findings – The authors find that higher volatility has a negative impact on growth for small and a positive impact for larger firms. Higher leverage is associated with higher growth. At the same time, there is heterogeneity in the determinants of growth across firms from different sectors and across firms with a different legal status.
Practical implications – While most traditional macroeconomic models assume that growth and volatility are uncorrelated, a number of microeconomic models suggest that the two may be linked. However, it is unclear whether the link is positive or negative. The paper presents additional evidence regarding this question. Moreover, understanding whether credit market conditions affect the link between volatility and growth is of importance for policy makers since it suggests a channel through which the credit market can have long-run welfare implications. The results stress the importance of firm-level heterogeneity for the effects and effectiveness of economic policy measures.
Originality/value – The paper has two main novel features. First, it uses a novel firm-level dataset to analyze the determinants of firm-level growth. Second, it analyzes the growth-volatility nexus using firm-level data. To the best of the authors' knowledge, this is the first paper, which addresses the link between volatility, growth, and credit market imperfections using firm-level data.
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Ownership Structure, Strategic Controls and Export Intensity of Foreign-invested Firms in Transition Economies
I. Filatotchev, Johannes Stephan, Björn Jindra
Journal of International Business Studies,
No. 7,
2008
Abstract
This paper examines the relationships between foreign ownership, managers’ independence in decision-making and exporting of foreign-invested firms in five European Union accession countries. Using a unique, hand-collected data set of 434 foreign-invested firms in Poland, Hungary, Slovenia, Slovakia and Estonia, we show that foreign investors’ ownership and control over strategic decisions are positively associated with export intensity, measured as the proportion of exports to total sales. The study also analyzes specific governance and control configurations in foreign-invested firms, showing that foreign equity and foreign control over business functions are complementary in terms of their effects on export intensity.
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Incubator Age and Incubation Time: Determinants of Firm Survival after Graduation?
Michael Schwartz
IWH Discussion Papers,
No. 14,
2008
Abstract
On the basis of a sample of 149 graduate firms from five German technology oriented business incubators, this article contributes to incubator/incubation literature by investigating the effects of the age of the business incubators and the firms’ incubation time in securing long-term survival of the firms after leaving the incubator facilities. The empirical findings from Cox-proportional hazards regression and parametric accelerated failure time models reveal a statistically negative impact for both variables incubator age and incubation time on post-graduation firm survival. One possible explanation for these results is that, when incubator managers become increasingly involved in various regional development activities (e.g. coaching of regional network initiatives), this may reduce the effectiveness of incubator support and therefore the survival chances of firms.
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