This paper gives an empirical analysis of determinants of new-firm survival in the manufacturing sector of Baden-Wuerttemberg (Germany) from 1981 to 1994. The analysis focuses on firm- and industry-specific determinants of new-firm survival. A possible effect of regional agglomeration and of the business cycle is also tested, albeit in a very general manner. From a methodical point of view parametric and semiparametric duration models are used. Grouped duration models are estimated taking into account the problem of ties. Moreover, the problem of unobserved heterogeneity is considered which has so far been neglected in numerous studies. The empirical analyses show with respect to industry-specific effects that the risk of new-firm failure is the larger the larger an industry’ s minimum efficient scale is, the worse the sectoral demand-conditions are, the more narrow the market is, the higher dynamics of foundation within an industry are. The liability of smallness-hypothesis is confirmed for German manufacturing while with respect to firm age the results favour the liability of adolescence-hypothesis instead of a pure liability of newness. Copyright Springer 2007hazard rate, new-firm survival, exit, entry, duration analysis, entrepreneurship, D21, L1, L6,

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. Copyright 2009 The Authors. Journal compilation 2009 Blackwell Publishing Ltd.

Innovative activity is performed to a considerable extent in the service sector, namely within the so-called knowledge intensive business services (KIBS). Particularly emphasizing the role of absorptive capacity, we analyze possible determinants of incremental and radical firm innovation using firm micro data from the KIBS Foundation Survey. The results show that access to knowledge through networking and cooperation is of utmost importance for innovative activity in the KIBS sector. Access to knowledge from universities and research institutions is particularly important for radical innovation, notwithstanding the degree of formality of cooperation. In contrast, access to knowledge from clients or suppliers only has a significant impact on the probability to innovate if the cooperation with these partners is based on formal cooperation via joint projects or formal cooperation contracts. Furthermore, we find empirical evidence for a positive correlation between KIBS firms and clients from the manufacturing sector: these stimulate in particular incremental, but also radical innovation.Innovation, Absorptive capacity, Knowledge intensive business services, Networking Technological opportunities, Germany,

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