This paper analyzes the effects of the governmental financing instrument Spitzencluster-Wettbewerb (Leading-Edge Cluster Competition, LECC) on R&D expenditure of firms in Germany. The LECC promotes cooperative research among business firms and research institutions under the umbrella of a common strategy, which is pursued by regional cluster organizations. We measure the effect of LECC funding on private R&D spending as well as the effects of the policy instrument on the composition of R&D (internal vs. external). Our analysis is mainly based on data from the R&D survey for Germany. We combine propensity score matching (to identify statistical twins) with a difference-in-differences estimator in order to measure the causal effects of the LECC. These results are complemented with the findings from expert interviews. Our results show that the LECC significantly increases R&D expenditures in comparison to non-funded firms. On average, we did not find evidence of crowding out. At the same time, we identified a greater leverage effect of the LECC for small and medium-sized firms. A comparison with companies that have been funded in other R&D-programs shows that the LECC leads to a greater increase in R&D expenditure in small and medium-sized enterprises (SMEs). The expert interviews in general confirm these results and indicate that there are different patterns at firm level depending on firm size, strategy, and sector. In addition, they reveal that the effect of co-funding rules for R&D expenditure appears to be stronger for SMEs.

The role of private equity (PE) firms in buyouts has mainly been developed from the perspectives of agency theory and entrepreneurship theory. This chapter focuses on the part of this literature that has analyzed the effect of buyouts on capital expenditures, other types of investment, and financing constraints. Policy makers are often concerned that these leveraged buyouts make portfolio firms over-indebted. They are also concerned that PE investors have a short-term planning horizon and therefore cut investments, especially those with a long-term character. PE firms can contribute to reducing under- investment in firms with growth perspectives and reducing over-investment in firms with managers that tend to waste free cash flow. The chapter summarizes the effects of buyouts on investment from a theoretical point of view. It introduces the empirical methodology employed by empirical studies and related findings. The chapter discusses methodological problems in the existing literature and suggestions for future research, and the final section concludes.

This paper examines the interdependencies between MNE investment and divestment decisions. We derive a conceptual framework of “segmented intersubsidiary competition” and hypothesize that the competitive pressure of new investments on existing subsidiaries varies by regional dimension. Based on a database of 3524 French MNEs, we analyse intersubsidiary competition and intertemporal adjustment processes of the investment-divestment relationship between 2002 and 2010. Our empirical findings support the theoretical notion of segmented intersubsidiary competition within MNEs: Foreign investments create competitive pressure for foreign subsidiaries to be divested in subsequent periods, where domestic investments spur divestment at home. Inversely, foreign divestments are more likely to create new investment opportunities in the foreign than in the domestic arena. Our differentiations between investments/divestments in EU countries and in non-EU countries shows that the competitive pressure of new investments on existing subsidiaries is mainly limited to the same region.

This paper analyses how context-and time-dependent factors determine the impact of R&D subsidies on firm behaviour with respect to private R&D expenditures. Based on German R&D survey data, we combine propensity score matching with a difference-in-difference estimator in order to measure the causal influence of public direct R&D project funding on firm behaviour. Our results indicate that (i) repeated participation in R&D projects on average leads to a higher increase in R&D expenditures than once-off funding; (ii) the aggregate effect of R&D funding on R&D expenditures of business firms is somewhat higher for business-business collaboration projects than for science-business collaboration projects; (iii) R&D expenditures of business firms that cooperate with science show a higher share of external R&D spending. Results of one particular cluster programme indicate that at least the short-term development of R&D does not so much depend on which programme direct R&D project funding is applied to.

With its Leading-Edge Cluster Competition (in German: Spitzencluster-Wettbewerb; LECC), the Federal Ministry of Education and Research (Bundesministerium fur Bildung und Forschung, BMBF) is supporting innovation clusters in a nationwide contest for the first time. In three rounds, 15 cluster initiatives were selected and provided with funds to support them on their way to becoming international leaders in their field of technology, or, if they already held such a position, to maintain or expand their lead. Through a sustainable mobilisation of regional economic potentials, supporting the strategic development of Leading-Edge Clusters has the goal of increasing growth, securing or creating jobs and enhancing the attractiveness of Germany as a location for innovation and business. The BMBF contracted a project consortium to conduct an accompanying evaluation of the LECC. This consortium consisted of RWI, Essen (project coordination); the Institut fur Sozialforschung und Gesellschaftspolitik GmbH (ISG), Cologne; the Chair of Economics/Microeconomics at the Friedrich SchillerUniversity Jena, as well as the JOANNEUM RESEARCH GmbH, Graz. This summary of the final report comprises the main findings of the accompanying evaluation of the LECC for the duration of the project from 11/2008 to 04/2014.

Summary This paper deals with the medium-term effects of job mobility on the average wage growth of job-movers in eastern Germany. The analysis is based on all employees subject to social insurance contributions working in eastern Germany in 2004. Using a statistical matching procedure combined with a difference-in-differences estimator, we observe that job-movers achieve an average annual wage increase of 2.68% between 2004 and 2009, which is significantly higher than the annual wage growth of selected non-movers (1.34 %). The finding is very robust against changes in the matching procedure. The positive wage differential due to changing jobs was found for a variety of subgroups of individuals that were formed on the basis of sociodemographic and firm-specific characteristics. In contrast to the evidence in the 1990’s, the positive wage effect is now significantly lower for movers from eastern to western Germany compared to movers within eastern Germany.

Der Spitzencluster-Wettbewerb bildet ein Kernstuck der Hightech-Strategie der Bundesregierung. Im Rahmen des Wettbewerbs werden im Zeitraum von 2008 bis 2017 fur 15 ausgewahlte Cluster insgesamt 600 Millionen Euro an offentlichen Mitteln durch das Bundesministerium fur Bildung und Forschung (BMBF) verausgabt. Geforderte Einrichtungen sind in erster Linie Unternehmen und Forschungseinrichtungen in den jeweiligen Clusterregionen. Der vorliegende Bericht fasst die zentralen Ergebnisse der begleitenden Evaluierung des Spitzencluster-Wettbewerbs zusammen. Aufgabe dieser Evaluierung war es, die Entwicklung der geforderten Cluster und deren Ausstrahlung auf das regionale und sektorale Umfeld zu analysieren. Anhand einer Patentanalyse konnte gezeigt werden, dass die meisten Spitzenclusterregionen im europaweiten Vergleich tatsachlich zu den Spitzenregionen gehoren. Eine okonometrische Vergleichsgruppenanalyse ergab, dass besonders die geforderten kleinen und mittleren Unternehmen ihre Ausgaben fur Forschung und Entwicklung deutlich erhohten, und zwar pro offentlich geforderten Euro um insgesamt 1,36 Euro. Eine durchgefuhrte Netzwerkanalyse zeigte, dass es durch den Wettbewerb in den Clusterregionen zu einer Intensivierung bzw. einem Ausbau der Vernetzung der innovativen Akteure aus Wissenschaft und Wirtschaft gekommen ist. Gleichzeitig war eine gestiegene nationale und internationale Sichtbarkeit der Clusterregionen zu beobachten. Aus den Evaluierungsergebnissen ist insgesamt abzuleiten, dass der Spitzencluster-Wettbewerb einen wichtigen Impuls fur die Entwicklung der im Rahmen des Wettbewerbs geforderten Cluster in Deutschland leisten konnte, auch wenn sich die daraus resultierenden gesamtwirtschaftlichen Effekte uberwiegend erst in den kommenden Jahren voll entfalten werden.

In this paper we analyse the location choice of mobile entrepreneurs for the example of Germany’s biotechnology industry. In fact, 37.5 per cent of all founders of biotech firms within a planning region immigrated from another planning regions. The results of our econometric analysis indicate that only the number of immigrated scientific entrepreneurs increases with the difference in the number of researchers as well as the amount of third-party funds acquired by public research units between the receiving and sending entity. We conclude that the size and the excellence of localized knowledge base imply a positive selection of attracted entrepreneurs.

This paper deals with the medium-term effects of job mobility on the average wage growth of job movers in East Germany. The analysis is based on all employees subject to social insurance contributions working in East Germany in 2004. Using a statistical matching procedure combined with a difference-in-difference estimator, we observe that job movers yield an average annual wage increase of 2.68 % between 2004 and 2009 which is significantly higher than the annual wage growth of selected non-movers (1.34 %). The positive income effect is significantly lower for movers from East to West Germany compared to movers within East Germany.

Being international' has nearly become an undisputed aim for firms in a globalized world. Several papers find a positive relationship between foreign direct investment (FDI) and the home performance of firms. In this paper we address the 'FDI - export' relationship to better understand this pattern. Furthermore, by presenting first results on firm's post-divestiture employment growth at home we are able to provide a more comprehensive view on fi rm performance after stepping in and out of foreign markets. We apply a propensity score matching technique in combination with a difference-in-difference estimator to analyze the performance dynamics of French firms that invested abroad or carried out foreign divestitures during the period 2000-2007. FDI has on average a positive home firm eff ect in terms of export share, operating turnover and employment. Industry differences reveal that firms in high-tech industries experience a strong increase in their home performance, whereas firm performance in low-tech industries increases only moderately in post-investment periods. In contrast, the divestiture impact on the post-divestiture performance is rather negligible.

This paper studies the internationalization behaviour of French companies using more than 330,000 observations for three two-year intervals. We analyse the 'symmetric' role of productivity and other major firm attributes to characterize companies that enter into and exit from foreign markets. High levels of productivity are documented to be characteristic of companies deciding to engage in exporting or foreign direct investment (FDI). However, there does not seem to be a significant correlation between productivity and divestment decisions. Moreover, companies with corporate shareholders are more likely to intensify their international engagement and to retain their cross-border activities. Finally, high levels of short-term and long-term debt tend to increase the likelihood of entry into a more intense international engagement. (c) 2012 Elsevier B.V. All rights reserved.

This paper evaluates the R&D enhancing eff ects of two large public grant schemes for the German biotechnology industry (BioRegio, BioProfi le). Both grant schemes are organized in the form of contents for cooperation with the goal to foster the performance of innovative fi rms by their organization in research clusters. We apply a Diff erencein-Diff erences estimation technique in a generalized linear model framework, which allows us to control for diff erent initial regional conditions in R&D activity of the biotech sector. Our econometric fi ndings support the view that winners generally outperform non-winning participants during the treatment period, thus indicating that exclusive funding as well as the stimulating eff ect of being a “winner” have positive eff ects on R&D activity in the short-term. Apart from this direct winner eff ect, for the non-winning participants no benefi cial indirect eff ect due to a mobilization of local actors during the application phase could be detected. Finally, fi rst attempts in estimating the long-term eff ects of the contests for cooperation approach on the winner regions’ R&D activity in the post-treatment period show ambiguous results. JEL Classifi cation: O38, C23

This article evaluates the research and development (R&D) enhancing effects of two large public grant schemes for the German biotechnology industry (BioRegio and BioProfile). Both grant schemes are organized in the form of contents for cooperation and aimed at fostering the performance of innovative firms by their organization in research clusters. We apply a difference-in-differences estimation technique in a generalized linear model framework, which allows us to control for different initial regional conditions in R&D activity of the biotech sector. Our econometric findings support the view that winners generally outperform non-winning participants during the treatment period, thus indicating that exclusive funding as well as the stimulating effect of being a "winner" have positive effects on R&D activity in the short-term. Apart from this direct winner effect, for the non-winning participants no beneficial indirect effect due to a mobilization of local actors during the application phase could be detected. Finally, first attempts in estimating the long-term effects of the contests for cooperation approach on the winner regions' R&D activity in the post-treatment period show ambiguous results.

Many empirical papers tested the theoretical predictions of Helpman, Melitz and Yeaple (HMY, 2004) which sorts firms at different internationalization states according to their productivity levels. While these papers ignore the fact, that the theoretical predictions of HMY only apply to firms that become engaged in market-driven Foreign Direct Investment (FDI), we apply a more precise methodology using a French firm sample with more than 110 000 observations. Our results show that firms with a broader investment strategy, reflecting a great importance of market-driven motives, show higher productivity levels than firms with less encompassing foreign investment strategies. We conclude that the methodology is well-suited to sort firms according to the importance of market-driven FDI.

This paper considers the role of ownership form for the financial sustainability of German acute care hospitals over time. We measure financial sustainability by a hospital-specific yearly probability of default (PD) trying to mirror the ability of hospitals to survive in the market in the long run. The results show that private ownership is associated with significantly lower PDs than public ownership. Moreover, path dependence in the PD is substantial but far from 100%, indicating a large number of improvements and deteriorations in financial sustainability over time. Yet, the general public hospitals have the highest path dependence. Overall, this indicates that public hospitals, which are in a poor financial standing, remain in that state or even deteriorate over time, which may be conflicting with financial sustainability.