Etla » growth

The role of business subsidies in job-creation start-ups, gazelles and imcumbents

Heli Koski — Fri, 08 Apr 2011 11:00:00 +0000

Our data concerning the whole Finnish company population from the years 2003-2008 suggest that the impacts of business subsidies on employment growth differ more between high-growth start-ups and other firms than between start-ups and over five years old incumbents. All subsidies seem to relate positively to the contemporary employment growth both among start-ups and incumbents. Furthermore, our data show that both the employment of start-ups and older incumbents receiving employment or other subsidies grow more than that of non-subsidized firms after subsidy reception. Instead, we find that business subsidies do not provide significant further boost for the contemporary or after-subsidy growth of gazelles. There are apparently some other factors dominating the growth of young high-growth firms making them to grow strongly, in many cases, with or without subsidies.

Omistajuuden vaikutus suomalaisen työllisyyden kasvuun ja pysyvyyteen

admin — Wed, 16 Mar 2011 11:00:00 +0000

The study investigates empirically how ownership affects firms domestic employment and its fluctuations. We look at six different ownership categories : first generation family businesses, second generation (or older) family businesses, state-owned companies, foreign-owned companies, publicly listed companies, and others (e.g. co-operatives and non-listed, non-family companies). It turns out that ownership matters. Volatility of employment in listed companies is much higher than in other firms. State-owned companies show the highest stability in employment, and they have also reduced their personnel less than others during the economic crisis of 2008-2009. The group of second generation family businesses shows higher stability of employment than first generation. Family businesses (especially the second or subsequent generation enterprises) are typically not high-growth firms. They seem to prefer stability over swift growth.

Innovation Does Not Equal R&D. Strategic Innovation Profiles and Firm Growth

Jyrki Ali-Yrkkö — Wed, 27 Oct 2010 08:14:30 +0000

In this paper, we examine firm innovation and its link to firm growth. Instead of using the conventional conceptualization and operationalization of innovation in terms of the R&D budget, we use a more elaborate 12-dimensional conceptualization, which takes into account also the non-technological aspects of innovation. The 12-dimensional operationaliza-tion further enables the examination of strategic innovation profiles of individual firms. We find that different kinds of innovation activity all have effects on firm growth, but in different ways. R&D activity is important in that it leads to introduction of new products, but innovation in other dimensions – value chain strategy, brand, and distribution channels – is also linked to new product introduction. Value chain innovation is also related to the development and introduction of new services: innovation aimed at development and improvement of the customer experience in particular has a significant role in the development and introduction of new services.

Marginal Intra Industry Trade Expansion and Productivity Growth

admin — Wed, 19 Nov 2008 11:00:00 +0000

We use the concept of marginal intra-industry trade (MIIT) to analyse the effect of trade expansion on labour productivity growth across 23 EU countries and 94 manufacturing sectors in 1995-2005. The highest MIIT index values are found in sectors producing differentiated goods as well as in science and scale-intensive sectors, while the lowest are found in resource and labour-intensive sectors. Thus specialisation in sectors characterised by traditional comparative advantage has been associated with slower productivity growth. The results indicate that a trade-flow expansion characterised by intra-industry trade (high MIIT) is associated with faster productivity growth also after we control for the size in trade flow changes. Especially the increase in imports seems important. The analysis is mostly done using random-effects linear model specifications but further evidence is presented using several other estimation methods.

The Impact of Technological and Non-Technological Innovations on Firm Growth

admin — Thu, 13 Nov 2008 11:00:00 +0000

This study investigates the relationship between innovations and firm growth, based on the data of Finnish firms operating in the software industry. We find that in terms of turnover and employment, firms with only technological innovations do not grow more rapidly than other firms. However, firm growth is positively associated with the combination of technological and non-technological innovations.

Does Inter-Organizational Networking Support Regional Development? Evidence from a Survey of Finnish Enterprises

Mika Pajarinen — Tue, 07 Oct 2008 11:00:00 +0000

Three fourths of Finnish business enterprises have relationships that are deeper than those associated with normal market transactions, i.e., they are involved in inter-organizational networking. Regionally networking is more commonplace in North Savo, North Karelia/Kainuu, Central Finland and Lapland/Northern Ostrobothnia. Connections to other firms is the most prevalent and qualitatively most important type of networking. Net-working is predominantly a local phenomenon, particularly when it comes to firms partner-ships with educational and research institutions as well as public bodies. Networking may be associated with better firm profitability in low-tech industries. Participating in a national cluster may be associated with firms better growth prospects. In the absence of functioning local markets for some productive inputs, being engaged in inter-organizational networking may be a necessary conditions for firms survival.

Verkostoitumisen yhteys yritysten kannattavuuteen ja kasvuun: empiirisiä havaintoja

admin — Tue, 15 Jan 2008 11:00:00 +0000

even though inter-firm networking is often argued to be among the factors enhancing business performance, empirical research on the topic is scarce. We exploit Eurostats and Statistic Finlands pilot survey on inter-enterprise relations to study the issue. Our uni- and multivariate analysis does not suggest that there is a statistically significant positive or negative relationship between a firms networking activities and its profitability or growth. We conclude that networking is not a panacea; it does not boost performance automatically or independently. Its possible benefits depend on how it is organized and conducted.
Keywords : Inter-firm networking, business collaboration, outsourcing, profitability, growth.

Growth Prospects of Emerging Market Economies in Europe – How Fast Will They Catch up with the Old West?

admin — Sun, 30 Dec 2007 11:00:00 +0000

Using a neo-classical growth model, we analyse the real and nominal GDP per capita convergence of 21 emerging market economies (EMEs) of Central and Eastern Europe towards the EU15 average by 2050. We estimate the countries initial capital stocks and project future investment as a function of the GDP per capita gap, among other things, in order to have converging physical capital intensities in the long run. Due to standard-convergence in the model, catching up will continue at a decelerating speed. Also nominal convergence in prices that will lead to a real appreciation of the EME currencies with respect to the euro is projected as a function of the GDP-per-capita gap vis-à-vis the EU15. We also discuss whether the level of human capital in the EMEs is likely to allow for full catching up. We argue that the EU membership of most of the EMEs is likely to improve their economic, investment and business environments and lead to economic and other policies that support long-term convergence. According to the results, the EMEs will not quite catch up with the EU15 by 2050. However, our analysis of the uncertainty related to the growth rates and calculations of a confidence band for the results, as well as a qualitative assessment of other factors (politics, institutions, human capital) that have not been taken into account in the model explicitly lead us to conclude that some of the EMEs are likely to catch up with the EU15 average during the course of the next couple of decades.

Does Foreign Presence Stimulate Creative Destruction in Local Markets

admin — Wed, 19 Dec 2007 11:00:00 +0000

This paper studies the effect of foreign-owned companies (FOCs) in the region on establishment survival and growth in the Finnish business sector. We analyze whether the presence of the FOCs has asymmetric effects among the local businesses. Foreign presence in the region is measured in a novel way by using the regional links between establishments and their workers in the local labour markets. Evidence for small service establishments suggests that the presence of the FOCs contributes to aggregate productivity by cleansing inefficient units. The FOCs do not seem to stimulate productivity-enhancing restructuring among large, manufacturing or continuing establishments.

The Impact of Foreign Ownership on Company Growth

Jyrki Ali-Yrkkö — Mon, 02 Apr 2007 11:00:00 +0000

This study analyses foreign-owned companies operating in Finland.
Between 2001 and 2003 760 foreign companies either established a new site or
acquired an existing unit in Finland. The goal of this paper is to study the develop-
ment of these units. The results of statistical analyses are two-fold. First, estab-
lished foreign-owned units (greenfields) have increased their employment annually
on average 13-15 percent more than domestic-owned units established in the same
period. Furthermore in terms of net sales, foreign-owned units grew, on average,
10-12 percent more rapidly than domestic units. Second, the impact of foreign
ownership differs between greenfield investment and acquisitions. The results sug-
gest that the impact of ownership change on employment and on net sales is simi-
lar in domestic-to-foreign deals as in other deals.