Firm turnover and growth recorded in administrative data sets differ from underlying firm dynamics. By tracing the employment history of the workforce of new and disappearing administrative firm identifiers, we can accurately identify de novo entrants and true economic exits, even when firms change identifier, merge, or split-up. For a well-defined group of new firms entering the Belgian economy between 2004 and 2011, we find highly regular post-entry employment dynamics in spite of the volatile macroeconomic environment. Exit rates decrease with age and size. Surviving entrants record high employment growth that is monotonically decreasing with age in every size class. Most remarkably, we find that Gibrat's law is violated for very young firms. Conditional on age, the relationship between employment growth and current size is strongly and robustly positive. This pattern is obscured, or even reversed, when administrative entrants and exits are taken at face value. De novo entrants' contribution to job creation is relatively small and not very persistent, in particular for (the large majority of) new firms that enter with fewer than five employees. The authors are grateful to the Belgian National Social Security Office (NSSO), in particular to Peter Vets, for providing the data and for helping to develop the employee flow record linking method; and to Statistics Belgium, in particular to Youri Baeyens and Antonio Fiordaliso, for linking the NSSO data to the Belgian Business Register and for providing firm record linkages created for the Eurostat Structural Business Statistics. Financial support from ERC grant No. 241127 and KU Leuven project financing is gratefully acknowledged.

The slowing down of the global economy adds additional challenges to China’ economic policies as the country orchestrates its transition to lower resource dependency and higher technology intensity of output. Are policies aimed at technologically advanced sectors the right answer? Drawing from a newly created dataset of firms’ balance sheets over the period 1998–2013, matched with patents data until 2009, we uncover that expenditure in innovation had limited effect on boosting productivity, without generating a clear gain in overall productivity for the high-tech sector. As a matter of fact, there is a much higher dispersion in productivity outcomes in firms belonging to the low-technology sectors, which derives from a bunch of champions in those sectors scoring higher productivity dynamics than in the High-technology sectors. The paper finds those barriers to entry and in general, market power of incumbents in the high-tech generate less than optimal resource reallocation, which hampers the overall productivity. Policies should presumably aim at removing such obstacles rather than solely promote innovation expenditure.

A large empirical literature analyzes determinants of the make-or-buy decision. Transaction cost economics highlights the role of asset specificity, the property rights theory focuses on the relative marginal contributions to joint surplus creation, and some evidence suggests that making transactions more contractible facilitates outsourcing. We use a unique transaction-level dataset of outsourced automotive components to predict carmakers' choices between four distinct ways of organizing sourcing relationships. We derive conditional predictions for three characteristics: (i) the complexity or contractibility of a transaction, (ii) how objectively codifiable performance is, and (iii) the supplier's capabilities. For example, while dominant buyer investments might predict vertical integration, as in the property rights theory, other characteristics might convince a buyer to simply reorganize the collaboration with the supplier in a more suitable way. Our results suggest that "buy" relationships differ systematically and that the predictive power of our variables extend from the make-or-buy decision to howto-buy.