Agglomeration, networking and the Great Recession

Abstract

The aim of this paper is to analyse how and to what extent firms' external relations, such as the belonging to a local cluster or to a business group, affect the probability of firm survival and economic performance after the Great Recession of 2008. Our main hypothesis is that belonging to a business group or to a local cluster will mitigate the selection effects determined by real and financial shocks and that only the more efficient units in 'isolated' firms will survive. This means that firms that are part of a group or are located within a local cluster can be expected to show a lower likelihood of failure, but also lower performance compared to standalone firms. Estimating instrumental variable econometric models and using a large dataset of 155,841 Italian manufacturing joint stock companies, 28,167 of which are part of a group, we test these hypotheses for the period 2005-2012. Our results confirm expectations. Firms located in local clusters or that belong to a business group show higher rates of survival rate during the Great Recession compared to standalone firms. However, the latter show higher levels of performance in terms of growth and profitability.

Spatial Interactions in Business and Housing Location Models

“…The latest studies confirm that the optimal location for a business results from being part of a local cluster. This adherence may increase survival chances in times of crisis [50].…”

Firms persistence under sanctions:Micro‐levelevidence from Iran

“…In this situation, smaller firms face more difficulties in financing than larger firms because of credit rationing by financial intermediates (Arvanitis & Loukis, 2020). 2 While many previous studies have focused on the role of a firm's characteristics, such as size (Varum & Rocha, 2012), age (Cefis & Marsili, 2005), access to finance (Carbo-Valverde et al, 2016), exporting (Lee et al, 2012), ownership education (Jarmin et al, 2014), networking (Cainelli et al, 2019) and location (Ramalho et al, 2018), this section reviews the common persistent approaches implemented by many firms in response to the negative effects of economic turbulences.…”

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“…Этому не помешал даже спад темпов роста итальянской экономики, а также трансформация индустриальных районов по всей остальной стране в иные формы производства. При этом кризисы 2008 и 2012 годов ударили по индустриальным районам Меццоджорно в последнюю очередь: как показывает исследование [Cainelli et al, 2018], доля компаний, которые пережили мировой кризис и долговой кризис 2012 года в Италии, выше в индустриальных районах, чем среди фирм-одиночек. Это, по мнению авторов, связано с тем, что внутри районов есть механизмы поддержки, которые, с одной стороны, помогают фирмам сохраниться на плаву, а с другой -не дают неэффективным фирмам самоустраниться с рынка.…”