Ausländische Unternehmen und Übernahmeeffekte — neue Fakten für Deutschland

Surprisingly, relatively little is known about foreign-controlled firms’ activities in the German economy, although Germany is one of the most important FDI inflow countries worldwide. Recently, a new database on foreign ownership became available in the framework of German official statistics. The first econometric analyses of this database find evidence for the superior productivity and significantly lower profitability of foreign firms compared to their German counterparts. Furthermore, foreign takeovers are on average followed by much larger employment declines than German takeovers and show no productivity improvements.     

Foreign ownership and firm performance in German services

This study provides the first comprehensive analysis of foreign-controlled enterprises in the German service sector based on new micro-data from official German statistics. Various performance measures were examined via comparison of unconditional and conditional means and through use of quantile regression techniques. Foreign-controlled affiliates consistently performed better than German-owned affiliates. In contrast, profitability exhibited precisely the opposite trend. Moreover, labour productivity did not significantly differ when the comparison group consisted of domestically owned affiliates with a high degree of internationalization. A breakdown by country of origin showed that European affiliates pay lower wages and export less relative to non-European affiliates, and US firms have no productivity advantage as in manufacturing.     

The Influence of Selected Factors on the Perceptions of Managers of Small Business Firms Regarding Legal Firms

Abstract

The South African service provider is faced with an increasingly turbulent and complex competitive environment (Griffith & Rust, 1997:109-116). Factors that impact specifically on the environment of service firms (such as the providers of legal services) include the growing importance of consumerism and a drastic increase in competition (Harrel & Fors, 1992:299-306).

The latter factor has a number of causes, amongst others, a stagnating economy (Griffith & Rust, 1997:109-116). A factor that impacts directly on the growing competition amongst providers of legal services is the increase in law graduates and commensurate increase in qualified attorneys and advocates entering the market. Figures supplied by the Law Society of the Cape of Good Hope and the Law Society of the Transvaal indicate an increase in excess of 50% in the number of practising attorneys in both the former provinces of the Cape and Transvaal between the years 1990 and 1997.

This article presents an exploratory study establishing the relative value attached by small business in South Africa to certain factors, inter alia advertising and location, pertaining to firms providing legal services. A better understanding of the importance of these factors will assist legal firms to improve service delivery thereby improving profitability.     

Absorptive capacity,learning and profiting from outward FDI: Evidence from Canadian firms

The extant literature highlights a threshold productivity level firms are required to attain ex-ante in order to successfully undertake FDI. The current paper extends this framework by modelling a threshold productivity range which is below the required threshold productivity level. Firms in this range can successfully venture abroad when learning allows these firms to rise above that threshold productivity level, ex-post. Theoretical models which predict negative profitability for firms which undertake FDI when below the required threshold productivity level are extended to incorporate learning, and negative profits during the transition path turn positive once productivity increases above the threshold productivity level. The hypotheses developed are tested using panel data on firms operating in Canada over the period 2000 to 2014. These firm-level data include measures of productivity, firm size, R&D intensity, and when firms undertake outward FDI. We demonstrate that firms which venture abroad while in the threshold productivity range and also have sufficiently high levels of absorptive capacity, proxied by R&D intensity, are able to learn from their foreign experience, and hence increase their productivity levels, ex-post.     

Advertising and Economic Development

In this article it is argued that West Germany has developed into the largest advertising market with the highest productivity per employee in Western Europe. We observe a continuous increase of net advertising turnover during the 1970s. Some extraordinary characteristics of the German advertising market (such as the structure of the TV advertising market and the printed media industry), which set it into sharp contrast to other European advertising markets, are discussed. Furthermore, we analyse the relationship between advertising and the business cycle movement (procyclical v. anticyclical advertising strategies) and we find that the majority of German business firms still pursue a procyclical advertising strategy although evidence seems to prove that an anticyclical advertising policy adopted during recessions will result in higher market shares and strengthened market positions of advertised brands.     

Firm size and growth in Sweden's life insurance market between 1855 and 1947: A test of Gibrat's law

Using data for the period from 1855 to 1947 and the two sub-periods, 1855–1902 and 1903–47, the article examines whether the organic growth rates of 38 Swedish life insurance firms are independent of size, as predicted by Gibrat's (1931) Law of Proportionate Effects. Using panel unit root tests and panel Generalised Method of Moments (GMM) regression, the article finds a significant difference between the growth rates of small and large Swedish life insurance firms (with smaller firms tending to grow faster than larger firms), a result that clearly contradicts Gibrat's Law as a long-run tendency in the Swedish life insurance sector. significant influences were also found on firm growth from profitability, organisational form, reinsurance, the real rate of interest and the Swedish regulatory environment.     

The path-to-profitability of Internet IPO firms

Extant empirical evidence indicates that the proportion of firms going public prior to achieving profitability has been increasing over time. This phenomenon is largely driven by an increase in the proportion of technology firms going public. Since there is considerable uncertainty regarding the long-term economic viability of these firms at the time of going public, identifying factors that influence their ability to attain key post-IPO milestones such as achieving profitability represents an important area of research. We employ a theoretical framework built around agency and signaling considerations to identify factors that influence the probability and timing of post-IPO profitability of Internet IPO firms. We estimate Cox Proportional Hazards models to test whether factors identified by our theoretical framework significantly impact the probability of post-IPO profitability as a function of time. We find that the probability of post-IPO profitability increases with pre-IPO investor demand and change in ownership at the IPO of the top officers and directors. On the other hand, the probability of post-IPO profitability decreases with the venture capital participation, proportion of outsiders on the board, and pre-market valuation uncertainty.     

Export and Firm Performance: Evidence on Productivity and Profitability of Italian Companies

Empirical research in international trade has shown that exporting firms display higher productivity than their non-exporting competitors. This paper focuses on the relation between export and profitability. Our evidence on Italian exporting firms shows that exporting activity is not systematically associated to higher firm’s profitability. This is shown both by means of non-parametric methods and, with an approach that is more standard within the empirical trade literature, by regression techniques that try to identify an “export premium”.     

Productivity Premia for German Manufacturing Firms Exporting to the Euro‐Area and Beyond: First Evidence from Robust Fixed Effects Estimations

This paper reports estimates of the productivity premium of German firms exporting to the Euro‐zone and beyond, controlling for unobserved time‐invariant firm‐specific effects. Furthermore, it tests for self‐selection of more productive firms into exporting beyond the Euro‐zone. The main contribution of the paper is to correct a serious flaw in hitherto published studies that ignore the potentially disastrous consequences of extreme observations, or outliers. The paper shows that estimates of the exporter productivity premium by destination are driven by a small share of outliers that comprises some five per cent of all firms. These outliers are identified by a recently developed highly robust estimator for models with fixed effects. Using a ‘clean’ sample without these outliers, the estimated productivity premium of firms that export to the Euro‐zone only is no longer statistically different from zero at a conventional error level, and the estimated premium of firms exporting beyond the Euro‐zone, too, over firms that serve the German market only is tiny. Furthermore, an ex‐ante differential that is statistically significant and large only shows up for enterprises that exported to the Euro‐zone already and start to export to countries outside the Euro‐zone. These conclusions differ considerably from those based on non‐robust standard regression analyses.     

The Effects of Cross‐Functional Integration on Profitability,Process Efficiency,and Asset Productivity

We employ information processing theory (IPT) to posit beneficial impacts of internal integration on firm profitability and its underlying components of process efficiency and asset productivity. We further hypothesize that these effects are greater for firms that operate wider spans of supply chain processes. These expectations are tested with the combination of two different data sources: primary data collected to gauge levels of internal integration, and secondary data collected from financial reports including profitability performance and related financial ratios. The results provide evidence that internal integration mainly affects profits by driving process efficiencies. These efficiencies appear to be especially significant in sales, general, and administrative related costs for firms that have broad process spans. In contrast, the data analysis offers no evidence of a relationship between internal integration and asset productivity. Based on these findings, we point out important implications for the applicability of IPT in explaining the effects of internal integration, and identify a call for action for practitioners. Overall, our study enhances both the rigor and relevance of internal integration research by grounding it in IPT, by utilizing objectively reported financial data, by identifying specific cost benefits, and by studying the impact of process span as an important contingency.     

The long-term impact of service empathy and responsiveness on customer satisfaction and profitability: a longitudinal investigation in a healthcare context

Rising labor costs in healthcare industries have led many firms to underinvest in service empathy and responsiveness by downsizing staffing levels. Although such a strategy may help contain operating costs and improve productivity in the short run, its sustainability and long-term effect remain unclear, as the literature offers competing explanations of such an effect on customer satisfaction and overall profitability. Using 24 quarters of longitudinal patient satisfaction data and archival financial data from 25 clinical units in a large healthcare organization, this study examines how empathy and responsiveness influence profitability over time. The findings show that downgrading empathy and responsiveness allows firms to lower costs, resulting in immediate productivity benefits; however, this strategy has an enduring negative effect on customer satisfaction and ultimately hurts profitability in the long run.     

Participation in export and Chinese firms’ capacity utilization

This paper first sets up a firm heterogeneity trade model and shows that given capital stock and productivity, export firms will have higher rates of capacity utilization. In addition, given capital stock and fixed export costs, firms with higher productivity are more likely to export. I then use the 2012 Chinese enterprise survey from the World Bank to empirically investigate the impact of participation in export on Chinese firms’ capacity utilization rate. The results show that on average, export firms have capacity utilization rate 1.55–2.01 percent higher than non-export firms, which amounts to 14.6–18.9 percent of the standard deviation of capacity utilization rate in the sample. I also find that firms with a larger part of shares owned by the government have lower capacity utilization. Stronger market competition leads to over-investment and therefore lower capacity utilization rate. Faced with more rigorous labor market regulation, firms will substitute capital for the use of labor, resulting in higher capacity utilization rate.     

Real effects of private equity investments: Evidence from European buyouts

This study investigates the effects of buyout deals on the ex-post performance of target companies. The analysis is based on a sample of 241 private-to-private buyouts involving European companies between 1997 and 2004 and a control sample of non-buyouts selected through a propensity score matching methodology. The paper explores three different dimensions of firm performance: size, profitability and productivity. The results indicate a positive impact of buyouts on the growth of total assets and of employment in target firms in the short- and mid-term. An equivalent clear pattern cannot be identified for productivity, while we estimate a lower operating profitability for buyout companies with respect to the control group three years after a deal is made. When we restrict the analysis to the sub-sample of buyout companies, we find that generalist funds negatively and significantly impact the mean ex-post operating profitability of PE-backed firms, while turnaround specialists are positively associated with operating profitability. The evidence also highlights that target companies whose lead investor is located in the same country show relatively higher ex-post profitability performance.     

Government connections and the persistence of profitability: Evidence from Chinese listed firms

We find that state owned enterprises (SOEs hereafter) have lower (higher) mean-reverting rates when profitability is better (worse) than the norm; while non-SOEs with politically connected executives have lower (higher) mean-reverting rates when profitability is extremely better (worse) than the norm. In addition, SOEs controlled by the central government have lower mean-reverting rates than those controlled by local governments. Our results are robust to a series of robustness tests and a test using alternative measures of profitability. We argue that government connections help firms maintain a relatively competitive advantage and thus have an important influence on mean-reverting patterns of profitability for Chinese firms.     

Firm performance and size: Explanations from the small firm sectors

Conclusion This paper has presented the case that small firms deserve greater attention from economists who, in the past, have been interested primarily in larger firms.It is argued that it is unjustifiable to regard the small firm as simply a scaled-down version of a large firm. Instead, in several important areas of economics the small firm behaves in a way which is the opposite to that proposed by conventional theory, calibrated upon the large firm sector. For example it is shown that Gibrat's Law does not apply to the small firm sector. It is also argued that entry by new firms does not necessarily take place when profitability in that industry increases.Given that the small firm sector is becoming of increasing importance in the creation of wealth and employment in most developed countries the paper begins to sketch out the factors which influence the motivations and aspirations of the owners of these businesses and explores their implications for conventional economics.In particular it discusses the role of multiple ownership of small businesses by entrepreneurs. It argues that this little researched topic requires more investigation by theorists to investigate the factors influencing entrepreneurs decisions on the appropriate portfolio of businesses to be owned.This paper has benefitted from the many helpful comments received from Zoltan Acs, Hans-Jurgen Ewers and others attending the symposium. The views expressed, however, are those of the author alone.     

Lending to Small and Medium-Sized Firms: Is There an East-West Gap in Germany?

The financing of small and medium-sized firms is important for the catching-up of the East German to the West German economy since reunification. We explore whether it is restricted by unfavorable bank loan terms, using bank-survey data on lending decisions to small and medium-sized firms. A comparison of the terms of lending between the former East German and West German states yields a lending gap given by higher loan prices and collateral requirements in East Germany. This gap can be explained by differences in credit risks and lending strategies of banks.     

论我国外商直接投资的技术溢出效应——基于各地区19个制造业行业的经验分析

利用我国2001年与2002年制造业19个行业的截面数据对外商直接投资的技术溢出效应进行了分析,考察外商直接投资的技术溢出效应。似不相关估计结果表明,整体而言,外商投资是促进技术进步,具有“鲁棒性”的影响因素,同时,对于国内企业或西部地区而言,外商投资具有显著的地区正效应与显著的行业负效应。     

Growing profitable or growing from profits: Putting the horse in front of the cart?

Firm growth is almost universally portrayed as a good thing, and is commonly used as a measure of success. Applying resource-based reasoning, we argue that growth is often not a sign of sound development. Specifically, we hypothesize that firms which grow without first securing high levels of profitability tend to be less successful in subsequent periods compared to firms that first secure high profitability at low growth. Empirical tests using two large, longitudinal data sets confirm that the profitable low growth firms are more likely to reach the desirable state of high growth and high profitability. In addition, they have a decreased risk of ending up performing poorly on both performance dimensions compared with firms starting from a high growth, low-profitability configuration. The results suggest that academics, managers, investors and policy-makers may benefit by adopting a more nuanced view of firm growth that explicitly incorporates its intricate relationship with profitability.     

我国制造业劳动生产率增长源泉研究——基于规模递增效应与劳动力结构转变的分析

以我国制造业1980-2006年相关数据为基本资料,运用卡尔多·凡登定律(CaldorVerdoorn Law)来检验我国制造业是否存在劳动生产率的规模递增效应,并根据生产率增长的需求驱动路径来分析制造业劳动力结构变动对劳动生产率增长的影响,在此基础上采用偏离一份额分析法(Shift-Share Analvze)方法来进一步分解劳动力结构变动对劳动生产率增长的贡献.研究结果表明,我国制造业至少在1995-2006年间存在生产率增长的规模递增效应,且在这阶段间存在着地区间剩余劳动力的转移;偏离一份额分析法分解则表明地区间劳动力的流动对我国制造业劳动生产率增长的贡献份额较低,劳动生产率增长的重要来源是各地区行业本身劳动生产率的内部提升.     

Born globals – presence,performance and prospects

The concept born global firms has gained a spectacular increase in interest from both academic and political circles. Rigorous quantitative treatment of born global firms are however rare in the international business/economics literature. Implementing unique data on all Swedish start-ups during 1998–2008 in the manufacturing sector, we conclude that born global firms are a very rare event, that their prevalence seems invariant to time, and that they perform similar to other matched “twin” firms with regard to profitability and productivity but report a considerably higher growth in employment and sales. These results are robust to a wider definition of born global firms and to the timing of performance measurements.