Sectoral patterns of firm exit in Italian provinces

There is considerable variation in the firm exit rate across the 103 provinces in Italy. This paper investigates a range of determinants of the exit rate for twelve different sectors in the Italian provinces for a period of eleven years. The analysis shows that the exit rate is positively affected by entry in the previous year (displacement) in the same sector. Previous exit has a different effect for the manufacturing industry as compared to the business services. More specifically, exit persists in manufacturing while in the business services it is rather exit in related sectors in the same province that leads to increased exit, probably due to the loss of clients or suppliers. The presence of industrial districts diminishes exit, especially in two manufacturing sectors (Food and Clothing), Commerce and Transport. Provinces with strong trademark activity appear to have lower exit rates.     

Firm growth and liquidity constraints: evidence from the manufacturing and service sectors in Italy

We use a large firm-level panel data set to analyse the relevance of liquidity constraints on firm growth in Italy. In most European countries, mainstream financial institutions are scantly able to provide affordable credit facilities to small firms. Thus, these firms are forced to finance their growth almost exclusively through retained earnings. We estimate a dynamic version of Gibrat-law, incorporating cash flow as a measure of financial constraints, for two different size classes within small and medium size enterprises and for several industries in manufacturing and service sectors. The findings show that, in general, small manufacturing firms have higher growth-cash flow sensitivities with respect to medium firms. Conversely, our results highlight, for the services, a significant heterogeneity in the impact of liquidity constraints on firm growth. In particular, the sensitivity of growth rates to the cash flow appears relatively high for small firms belonging to Knowledge Intensive Business Services. Validation of Gibrat-law in the services suggests that an important group of industries, with a superior capacity of encouraging firm’s competitiveness, need more financial resources to promote their growth and that of the manufacturing sectors with whom they are connected.     

The effect of crises on firm exit and the moderating effect of firm size

The liability of smallness assumption suggests that smaller firms face higher exit risks. However, does it apply during crises? We show that during downturns size reduces firms’ exit risk by less; the hazard rate increases more rapidly in size.     

Price behaviour in the Italian manufacturing industry

This paper sets out to test the hypothesis that the price-cost margins of Italian manufacturing industries are influenced by excess domestic demand and by international prices of manufactured products. Using annual data (1956–1982) a mark-up equation is estimated for each of the twelve industries in which the manufacturing sector has been disaggregated. The ratio of industry price to average total cost is functionally related to the ratio of international price to domestic cost and a measure of excess demand. On the basis of the estimates, which are obtained by Maximum Likelihood techniques, and some specification tests, it is concluded that both factors influence pricing behaviour although their effect is not uniformly significant in every sector.     

Patents, firm size and financial constraints: an empirical analysis for a panel of Italian manufacturing firms

The paper empirically investigates the issue of financial constraintsto investment, focusing on its relationship with innovationactivities. The study is based on the analysis of a cross-industriespanel of 804 Italian companies, observed through the years 1995–2000.The main objective of the study is to highlight whether thereare financial determinants underlying the strong bias of patentingactivity towards larger companies in the Italian economy. Byapplying a dynamic panel analysis, we found that only the firmsshowing lower financial constraints are able to keep a sustainedpatenting profile through time. Our evidence suggests the existenceof an imperfect capital market in the Italian economy, particularlyin the case of medium-sized companies, which tend to delay inefficientlythe start of in-house R&D activities.     

Entry and exit of manufacturing plants over the business cycle

This paper analyzes the plant-level entry and exit over the business cycle. We document basic patterns of entry and exit of U.S. manufacturing plants between 1972 and 1997. We find that the entry rate is more cyclical than the exit rate. We also find that the differences in productivity and employment between booms and recessions are particularly larger for entering plants than for exiting plants. Our new finding suggests that the selection at the entry margin may be more important than the selection at the exit margin in understanding the plant-level dynamics over the business cycle.     

Technological choices and regulation: the case of the Canadian manufacturing sectors

Abstract The economic environment in which Canadian manufacturing firms operate has changed substantially over the last 40 years. Technological changes, new regulations, deregulation, and exogenous economic shocks all have been important aspects of this economic environment. In this article, we show how to include such changes in the economic environment faced by the firms in a behavioural model that includes the investment decision of the firm under uncertainty. Assumptions regarding the expectation formation process and technology are kept minimal. We estimate the effects of innovations such as the free trade agreement, the foreign investment review agency, and the federal environmental policy on the economic decisions of fifteen Canadian manufacturing sectors. JEL Classification: D24
Choix de technologies et réglementation: le cas des secteurs manufacturiers canadiens Au cours des 40 dernières années, l'environnement économique des firmes manufacturières canadiennes s'est grandement transformé. Que ce soit à cause du changement technologique, de la réglementation, de vagues de déréglementation ou de chocs économiques exogènes, les firmes ont dû s'adapter en modifiant leur technologie. Dans cet article, nous montrons comment prendre en compte les changements de l'environnement économique des firmes dans le cadre d'un modèle décisionnel de la firme en incertitude avec investissement. Les hypothèses concernant la technologie et les anticipations sont aussi générales que possible. Nous estimons l'effet qu'ont eu l'accord de libre échange, l'agence de tamisage des investissements étrangers et la politique environnementale fédérale sur les choix de technologies des firmes de quinze secteurs manufacturiers canadiens.     

Rethinking the import-productivity nexus for Italian manufacturing

We provide evidence on the firm level productivity effects of imports of intermediates. By exploiting a large panel of Italian manufacturing firms, we are able to separately explore the role of importing from high and low income countries. Importing does not permanently affect the firm productivity growth. This finding holds both when we test for the import entry by means of Propensity Score Matching techniques and when we analyse the import intensity within a dynamic panel data model framework. On the contrary, we confirm the existence of self-selection into importing. Also, our evidence supports the learning-by-exporting effects in Italian manufacturing and we prove that this result is robust to the control of firm import activity.     

Ownership transformation,firm performance and manufacturing growth in China

Many commentators and researchers have attributed the manufacturing success in China to its ownership reforms. Using a micro database from the Chinese National Bureau of Statistics, this paper documents and quantifies this development. With systematic and robust analyses, it shows that the development of private ownership indeed played an essential role in improving firm performance and the allocation and utilization of production resources in the Chinese manufacturing sector. In addition, the paper estimates the contributions of firms under different ownership to manufacturing growth, showing that the development of private ownership was the driving force of manufacturing growth in China. The strong credible evidence has important policy implications for further maintaining sustainable development in China.     

Entry,exit and productivity growth: Spanish manufacturing during the eighties

This paper analyses the role played by both competitive pressure (increasing imports) and the restructuring of industries through entry and exit in productivity growth of Spanish manufacturing during the eighties, the key period of its accession to the EEC economy. A GMM panel estimation of the determinants of corrected Solow residual for 75 manufacturing during 1979-1990, shows that these forces accounted for 80% of productivity growth, playing an important role the displacement of inefficient firms by competitive entry.JEL Classification: D24, C33We are grateful to S. Bentolila, F. Bourguignon, T. Coelli, J. Dolado, A. de la Fuente, J. García, L. Rodríguez, J. Segura, X. Vives and an anonymous referee for useful comments on previous versions of this paper. All remaining errors are our own.     

Knowledge,profitability and exit of German car manufacturing firms

In this paper, the profitability of German car manufacturing firms is related to different indicators for the knowledge incorporated in the firms since the birth of the industry in 1886. The analysis is performed with an ordered probit model, where information about the mode of exit of the firms is exploited to construct a latent variable for profitability. Knowledge is represented by the number of patents, learning-by-doing and entrepreneurial experience before entry. The results show that knowledge is significantly positively related to firm profitability and that each of the three knowledge forms exerts an independent effect.     

Technical efficiency and ICT investment in Italian manufacturing firms

The importance of Information and Communication Technologies (ICTs) is a much debated question with extensive literature aimed at understanding the role of ICTs in increasing economic growth, firm productivity and firm efficiency. Different methods to estimate firm efficiency are used in this study. In particular, both the translog and the Cobb–Douglas production functions are used in order to estimate the impact of ICT on Technical Efficiency (TE) in Italian manufacturing firms over the period 1995 to 2003. Results show that ICT investments positively and significantly affected firms’ TE. Moreover, group, size and geographical position have a positive influence on TE. Finally, the results show that older firms are, on average, more efficient than newer ones.     

Multinational enterprises and innovation: firm level evidence on spillover via R&D collaboration

This paper estimates the knowledge spillovers to multinational enterprises (MNEs) in Sweden via domestic and foreign R&;D collaboration. Applying an augmented generalized method of moments-estimator that accounts for selectivity and simultaneity bias on data from 1,249 MNEs, our research has resulted in five distinct conclusions. First, we find that the knowledge spillovers via R&;D collaboration typically take place as a network phenomenon rather than a process between the local firm and a single innovation partner. Second, successful collaboration is conditional on the presence of foreign innovation partners in the network. Third, output is found to be an increasing function of R&;D-collaboration only among non-export oriented firms. Fourth, foreign MNEs, selling mainly to local and regional markets in Sweden, benefit more from R&;D collaboration than do other firms. Overall, the results show that demand-driven motives that require entrepreneurial knowledge to adapt products to local consumers and markets are more important for successful R&;D-collaboration than supply-driven motives.     

Robotization and labour dislocation in the manufacturing sectors of OECD countries: a panel VAR approach

Robots are the most important innovation which has affected the production process in the last three decades. Thanks to the latest advances in technology, they have been able to perform an ever-increasing number of tasks, eventually replacing human work within the whole production process. However, because of the scarcity of suitable data, the extent of this potentially disrupting process is not fully assessed. This paper makes up for the lack of empirical evidence on the effect of robotization on labour dislocation using data collected by the International Federation of Robotics (IFR) on the number of robots installed in the different manufacturing industries of 16 OECD countries over the period 2011–2016. We show that at the industry level a 1% growth in the number of robots reduces the growth rate of worked hours by 0.16, as well as the selling prices and the real values of the compensations of employees. Moreover, we show that a given sector is more likely to be robotized when it is expanding both in terms of relative prices and employee compensations. We conclude that, at least in the selected countries, the introduction of robots plays a key role in slowing down human labour and compensation growth.     

Entry and exit from Greek manufacturing industry: a test of the symmetry hypothesis

The paper examines the role of trade patterns in the entry and exit decisions of firms and tests the existence of symmetry between entry and exit factors. Trade patterns were found, through their entry and exit impact, to affect the structure of Greek industry rather unfavourably. Prospects seem to be bleaker within the integrated European market of the 1990s. The lack of symmetry leads to increasing concentration. The gloomy outlook is improved by the strong stand of existing, competitive firms.     

Italian corporate governance:: Effects on financial structure and firm performance

The Italian model of corporate governance is characterised by a high degree of ownership concentration, both for unlisted and listed companies. In the absence of an institutional framework facilitating more dispersed ownership, as in the Anglo-Saxon countries, or mechanisms for financial supervision, as in some Continental European countries, a limited degree of separation between ownership and control is achieved mainly by using pyramidal groups. We analyse some of the effects of this organisational mode on firms' financial structure and efficiency. We report results on the effects of the limited protection of minority shareholders on the extent to which companies in pyramidal groups succeed in raising external finance and investigate how internal capital markets work in pyramidal groups. We also present some results on the relationship between firms' performance and governance structures.     

Investment climate and firm productivity: an application to Vietnamese manufacturing firms

The fundamental aspect of a national competitive advantage is a good investment climate. Understanding the role of the investment climate in generating firm productivity has received extensive attention by policymakers and economists in many countries. The article studies the effect of different dimensions of the investment climate on firm productivity. Using a large dataset of Vietnamese manufacturing firms, the article finds that deficiencies in the investment climate are prejudicial to firm productivity and competition. Furthermore, in examining the effect of corruption in association with the quality of the business environment, the study also investigates the possibility that corruption may compensate firms for a bad investment climate or at least may neutralize the negative impact of inefficient government regulations. In other words, corruption acts as ‘speed money’ to improve the efficacy of the provision of public services or provides leeway for entrepreneurs to bypass the inefficient regulations. This situation, however, is extremely harmful to the economy in the long run because it distorts the market and erodes the incentives for productive investments. Developing countries therefore need to put much more effort into institutional reforms, especially fighting corruption and efficiency in the provision of public goods and services.