The shadow of death: analysing the pre-exit productivity of Portuguese manufacturing firms

Carreira, Carlos; Teixeira, Paulino

doi:10.1007/s11187-009-9221-7

Cited by 41 publications

(31 citation statements)

References 63 publications

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“…In their preceding study, however, Haynes et al (2000) failed to detect this effect. Moreover, Carreira and Teixeira (2009) generally confirm that market selection forces low-productivity firms to exit, but there is also non-negligible share of low-productivity firms that stay and high-productivity firms that exit. Thus, based on the models of Hopenhayn et al (1992) and Helpman et al (2004), we assume 8 that high-productivity French firms have a significantly higher propensity to invest abroad and to continue producing abroad than low-productivity firms.…”

Section: Firm Productivitymentioning

confidence: 71%

The Asymmetries of a Small World: Entry into and Withdrawal from International Markets by French Firms

2010

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in

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Section: Firm Productivitymentioning

confidence: 71%

The Asymmetries of a Small World: Entry into and Withdrawal from International Markets by French Firms

2010

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“…Also, we expect low real interest rates to discourage firm exit (Kendall et al, 2010). These effects are particularly important for small firms, which are generally more likely to exit due to cost disadvantages that make them less able to compete efficiently and survive (Fotopoulos and Spence, 1998;Esteve et al, 2004;Box, 2008;Carreira and Teixeira, 2011). Thus, the "liability of smallness" means that exits should be higher in regions with a large proportion of small firms.…”

Section: Firm Exit In Developed Countriesmentioning

confidence: 99%

The determinants of exit in a developing country: core and peripheral regions

2015

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“…At the firm-level, we control for firm age (see Jovanovic, 1982;Stinchcombe, 1965, among others), firm size (measured by the log number of employees) (e.g., Varum & Rocha, 2012), human capital (proxied by the share of college workers) (e.g., Acs & Armington, 2009;Bates, 1990), firm performance (sales per worker, in logs) (e.g., Bandick, 2010;Carreira & Teixeira, 2011) and location in urban centers (e.g., Fotopoulos & Louri, 2000). The effects of firm age and size are allowed to be non-linear in line with most of the literature, as these variables may exert an increasing (decreasing) effect on firm exit risks up to some point of firm age or size, while exerting a decreasing (increasing) effect thereafter.…”

Section: Empirical Strategy and Variablesmentioning

confidence: 99%

Economic slowdowns, hazard rates and foreign ownership

Varum¹,

Rocha²,

Silva³

2014

International Business Review

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This paper evaluates the link between foreign ownership and firm exit during crises, using a longitudinal micro dataset over an 18-year period. We address two main questions: first, if foreign affiliates have different failure rates than domestic firms during economic downturns, and second if the foreignness effect differs between two different economic downturns. The results partially confirm the liability of foreignness argument, suggesting that when the crisis was more pronounced at home than abroad, the differences in hazard rates between foreign and domestic firms reduce. The footloose argument is also only partially confirmed. For policy makers, our results on survival dynamics during crises are not against policies stimulating inward investment. There is no need to fear that foreign firms destabilize more than usual the host economy during economic slowdowns by immediately closing down operations.ß 2013 Elsevier Ltd. All rights reserved. Author's personal copy downturns because foreign firms hold some sort of ownership advantages over domestic ones. Foreign multinationals may have better conditions to face the crises owing to their multinationality advantages or they may resist more due to the sunk costs associated with their investment (Chung, Lu, & Beamish, 2008;Desai, Foley, & Forbes, 2004;Ghosal, 2010). Studies about the importance of foreign ownership during crises are relatively scarce, the notable exceptions being the studies by Á lvarez and Gö rg (2009), Lee and Makhija (2009) and Varum and Rocha (2011). Hence, in this paper we use longitudinal firm-level data for a large time span to assess, first, whether foreign ownership contributes to differentiating the incidence of firm exit during crises, controlling for other determinants that may affect the exit risk of firms. We use discrete time hazard models that account for firm-level unobserved heterogeneity to answer our research questions. In addition, we analyze whether the foreign ownership effect differs between two crises, which occurred in the same economy, in different periods of time and with different characteristics. To our knowledge the paper is unique in these respects. We analyze manufacturing firms created in Portugal in the period 1988-2005 by following their paths during the whole period and the economic slowdowns of early 1990s and 2000s. Portugal in particular is an interesting case as the economy experienced these significant slowdowns which provide us with 'a natural experiment to identify directly the ''footloose nature'' of multinationals' (Á lvarez & Gö rg, 2009).Results from past lessons may be of value in understanding more modern recessions, such as the one from which the world economy is currently recovering. For the Portuguese case we add to the previous important contributions of Portugal (2002, 2004), by enlarging the time span of their study and focusing on the potential effect of foreign ownership during (different) downturn periods. Compared to Varum and Rocha (2011), who examined the link between foreign ownershi...

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The shadow of death: analysing the pre-exit productivity of Portuguese manufacturing firms

Abstract: Exit pattern, Firm survival, Portugal, Pre-exit performance, Productivity, D24, D21, L25, L26, L60,

Cited by 41 publications

References 63 publications

The Asymmetries of a Small World: Entry into and Withdrawal from International Markets by French Firms

The Asymmetries of a Small World: Entry into and Withdrawal from International Markets by French Firms

The determinants of exit in a developing country: core and peripheral regions

Economic slowdowns, hazard rates and foreign ownership

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