Entry, exit, mergers and growth
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- Articles and reports: 11-622-M2013030Geography: Canada, Geographical region of Canada, Province or territoryDescription:
This paper describes the patterns of firm entry and exit across provinces in Canada, the relationship of these patterns to differences in industrial structure and the response of firm entry and exit to changes in the economic environment.
Firm entry and exit play an important role in shaping industrial structure and dynamics. Although entry and exit are ubiquitous, new firms are often associated with new ideas and the provision of innovative goods and services that enhance competition and force incumbents to become more innovative and efficient. Studies have shown the considerable role played by entry and exit in resource reallocation and productivity improvement.
Release date: 2013-12-10 - 2. Firm Turnover and Productivity Growth in Selected Canadian Services Industries, 2000 to 2007 ArchivedArticles and reports: 11F0027M2011072Geography: CanadaDescription:
The nature of the competitive process that causes a reallocation of market shares within an industry contributes to aggregate productivity growth. This paper extends our understanding of industry differences in the competitive process by examining firm turnover and productivity growth in various services industries in Canada and situating them relative to retailing and manufacturing, two industries which have been the focus of these studies in the past. Seven industries in the services sector, namely wholesale trade, transportation and warehousing, air transportation, truck transportation, broadcasting and telecommunications, business services and financial services, are examined.
Release date: 2011-08-19 - Articles and reports: 11F0027M2010061Geography: CanadaDescription:
We examine the simultaneous effects of real-exchange-rate movements and of tariff reductions on plant death in Canadian manufacturing industries between 1979 and 1996. We find that both currency appreciation and tariff cuts increase the probability of plant death, but that tariff reductions have a much greater effect. Consistent with the implications of recent international-trade models involving heterogeneous firms, we further find that the effect of exchange-rate movements and tariff cuts on exit are heterogeneous across plants - particularly pronounced among least efficient plants. Our results reveal multi-dimensional heterogeneity that current models featuring one-dimensional heterogeneity (efficiency differences among plants) cannot fully explain. There are significant and substantial differences between exporters and non-exporters, and between domestic- and foreign- controlled plants. Exporters and foreign-owned plants have much lower failure rates; however, their survival is more sensitive to changes in tariffs and real exchange rates, whether differences in their efficiency levels are controlled or not.
Release date: 2010-04-14 - Articles and reports: 11F0027M2009056Geography: CanadaDescription:
This paper examines the characteristics of plants in the manufacturing sector undergoing changes in ownership to further our understanding of the underlying causes of mergers and acquisitions. Previous Canadian studies (Baldwin 1995; Baldwin and Caves 1991) compare the performance of merged plants at the beginning and the end of the 1970s. This paper examines annual changes that occurred over the 1970s, 1980s, and 1990s to provide a longer-run perspective. In doing so, it outlines the amount of change taking place (both the number of plants affected and the share of employment) and the characteristics of plants that led to their takeover. Differences between foreign and domestic takeovers are also examined.
Release date: 2009-06-04 - 5. The Business of Nurturing Businesses ArchivedArticles and reports: 88F0006X2008002Description:
This paper is based on the findings of the Survey of Technology and Electronic Commerce (SECT), which in 2005 included a module on business incubation service providers and users. The results of the Survey of Business Incubators (SBI) were discussed in Joseph, Bordt and Hamdani (2006). The main difference between the two surveys is that the SBI focused on business incubators (BIs), firms that provided business incubation as their main line of activity the criterion used to define industry boundaries in statistical systems whereas the SECT covered all firms that provided business incubation services to new companies, whether it was their main activity or a small part of the business.
Release date: 2008-03-27 - 6. Product Market Competition and Agency Costs ArchivedArticles and reports: 11F0019M2006287Geography: CanadaDescription:
We model the effects of product market competition on agency costs, and develop two main empirical predictions. First, competition, by reducing agency costs, unambiguously increases the importance firms place on quality improvements. This leads to higher powered incentives, and in turn to increased effort and quality. Second, these effects are increasing in the severity of agency problems, and should be stronger in large, hierarchical corporations (where agency problems are more severe) than in entrepreneurial firms. We test the predictions of our model using a unique dataset with both firm and employee characteristics.
Release date: 2006-12-04 - Articles and reports: 11F0027M2006042Geography: CanadaDescription:
This paper investigates the extent to which productivity growth is the result of firm turnover as output is shifted from one firm to another, driven by the competitive process. Turnover occurs as some firms gain market share and others lose it. Some of the resulting turnover is due to entry and exit. Another part arises from growth and decline in incumbent continuing firms. This paper proposes a method for measuring the impact of firm turnover on productivity growth and shows that it is far more important than many previous empirical studies have concluded. It argues that firm turnover associated with competition is the main source of aggregate labour productivity growth in Canadian manufacturing industries.
Release date: 2006-09-25 - Articles and reports: 11-622-M2006013Geography: CanadaDescription:
This paper summarizes the findings of a research program aimed at outlining the importance to the firm growth process of competencies that arise from investments in intangible assets. The program has consisted of two parts. First, longitudinal databases have provided a rich set of studies on entry, exit, mergers and other aspects of dynamics related to growth and decline in firm populations. These studies have shown the pervasiveness of growth and decline in the firm population. By themselves, these studies do not demonstrate what strategies differentiate the most successful from the least successful. To do so, we have built a set of firm surveys that allowed profiles to be developed of the type of competencies that stem from investments in organizational capital. In turn, these are linked to administrative data that allow us to classify firms as either growing or declining. We then asked how differences in competencies were related to the performance of firms.
Release date: 2006-09-18 - 9. Head Office Employment in Canada, 1999 to 2005 ArchivedArticles and reports: 11-624-M2006014Geography: CanadaDescription:
This paper provides an analysis of trends in business sector head office employment in Canada from 1999 to 2005. It investigates changes in the number of head offices and head office employment over this period. The paper also examines the effect of foreign ownership on head office employment. It asks how much foreign-controlled firms contribute to Canadian head office employment and employment growth and what happens to head office employment when control of a firm changes from domestic to foreign. The paper also looks at the rate at which head offices enter and exit over time with a view to ascertaining whether the loss of a head office is a rare occurrence or a relatively common event. Finally, the paper presents trends in head office employment across metropolitan areas over the past six years.
Release date: 2006-07-13 - 10. Characteristics of Growth Firms ArchivedArticles and reports: 88F0006X2006003Description:
The objective of this study was to continue the investigation into growth factors initiated by the previous project: The characteristics of firms that grow from small to medium size in collaboration with the National Research Council Industrial Research Assistance Program (NRC-IRAP). Twenty five interviews augmented the original 25 with a more heterogeneous mix of Canadian technology-based firms led to the development of a framework for assessing the technology phase of small companies (or business lines in larger companies).
Release date: 2006-05-11
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Analysis (36)
Analysis (36) (0 to 10 of 36 results)
- Articles and reports: 11-622-M2013030Geography: Canada, Geographical region of Canada, Province or territoryDescription:
This paper describes the patterns of firm entry and exit across provinces in Canada, the relationship of these patterns to differences in industrial structure and the response of firm entry and exit to changes in the economic environment.
Firm entry and exit play an important role in shaping industrial structure and dynamics. Although entry and exit are ubiquitous, new firms are often associated with new ideas and the provision of innovative goods and services that enhance competition and force incumbents to become more innovative and efficient. Studies have shown the considerable role played by entry and exit in resource reallocation and productivity improvement.
Release date: 2013-12-10 - 2. Firm Turnover and Productivity Growth in Selected Canadian Services Industries, 2000 to 2007 ArchivedArticles and reports: 11F0027M2011072Geography: CanadaDescription:
The nature of the competitive process that causes a reallocation of market shares within an industry contributes to aggregate productivity growth. This paper extends our understanding of industry differences in the competitive process by examining firm turnover and productivity growth in various services industries in Canada and situating them relative to retailing and manufacturing, two industries which have been the focus of these studies in the past. Seven industries in the services sector, namely wholesale trade, transportation and warehousing, air transportation, truck transportation, broadcasting and telecommunications, business services and financial services, are examined.
Release date: 2011-08-19 - Articles and reports: 11F0027M2010061Geography: CanadaDescription:
We examine the simultaneous effects of real-exchange-rate movements and of tariff reductions on plant death in Canadian manufacturing industries between 1979 and 1996. We find that both currency appreciation and tariff cuts increase the probability of plant death, but that tariff reductions have a much greater effect. Consistent with the implications of recent international-trade models involving heterogeneous firms, we further find that the effect of exchange-rate movements and tariff cuts on exit are heterogeneous across plants - particularly pronounced among least efficient plants. Our results reveal multi-dimensional heterogeneity that current models featuring one-dimensional heterogeneity (efficiency differences among plants) cannot fully explain. There are significant and substantial differences between exporters and non-exporters, and between domestic- and foreign- controlled plants. Exporters and foreign-owned plants have much lower failure rates; however, their survival is more sensitive to changes in tariffs and real exchange rates, whether differences in their efficiency levels are controlled or not.
Release date: 2010-04-14 - Articles and reports: 11F0027M2009056Geography: CanadaDescription:
This paper examines the characteristics of plants in the manufacturing sector undergoing changes in ownership to further our understanding of the underlying causes of mergers and acquisitions. Previous Canadian studies (Baldwin 1995; Baldwin and Caves 1991) compare the performance of merged plants at the beginning and the end of the 1970s. This paper examines annual changes that occurred over the 1970s, 1980s, and 1990s to provide a longer-run perspective. In doing so, it outlines the amount of change taking place (both the number of plants affected and the share of employment) and the characteristics of plants that led to their takeover. Differences between foreign and domestic takeovers are also examined.
Release date: 2009-06-04 - 5. The Business of Nurturing Businesses ArchivedArticles and reports: 88F0006X2008002Description:
This paper is based on the findings of the Survey of Technology and Electronic Commerce (SECT), which in 2005 included a module on business incubation service providers and users. The results of the Survey of Business Incubators (SBI) were discussed in Joseph, Bordt and Hamdani (2006). The main difference between the two surveys is that the SBI focused on business incubators (BIs), firms that provided business incubation as their main line of activity the criterion used to define industry boundaries in statistical systems whereas the SECT covered all firms that provided business incubation services to new companies, whether it was their main activity or a small part of the business.
Release date: 2008-03-27 - 6. Product Market Competition and Agency Costs ArchivedArticles and reports: 11F0019M2006287Geography: CanadaDescription:
We model the effects of product market competition on agency costs, and develop two main empirical predictions. First, competition, by reducing agency costs, unambiguously increases the importance firms place on quality improvements. This leads to higher powered incentives, and in turn to increased effort and quality. Second, these effects are increasing in the severity of agency problems, and should be stronger in large, hierarchical corporations (where agency problems are more severe) than in entrepreneurial firms. We test the predictions of our model using a unique dataset with both firm and employee characteristics.
Release date: 2006-12-04 - Articles and reports: 11F0027M2006042Geography: CanadaDescription:
This paper investigates the extent to which productivity growth is the result of firm turnover as output is shifted from one firm to another, driven by the competitive process. Turnover occurs as some firms gain market share and others lose it. Some of the resulting turnover is due to entry and exit. Another part arises from growth and decline in incumbent continuing firms. This paper proposes a method for measuring the impact of firm turnover on productivity growth and shows that it is far more important than many previous empirical studies have concluded. It argues that firm turnover associated with competition is the main source of aggregate labour productivity growth in Canadian manufacturing industries.
Release date: 2006-09-25 - Articles and reports: 11-622-M2006013Geography: CanadaDescription:
This paper summarizes the findings of a research program aimed at outlining the importance to the firm growth process of competencies that arise from investments in intangible assets. The program has consisted of two parts. First, longitudinal databases have provided a rich set of studies on entry, exit, mergers and other aspects of dynamics related to growth and decline in firm populations. These studies have shown the pervasiveness of growth and decline in the firm population. By themselves, these studies do not demonstrate what strategies differentiate the most successful from the least successful. To do so, we have built a set of firm surveys that allowed profiles to be developed of the type of competencies that stem from investments in organizational capital. In turn, these are linked to administrative data that allow us to classify firms as either growing or declining. We then asked how differences in competencies were related to the performance of firms.
Release date: 2006-09-18 - 9. Head Office Employment in Canada, 1999 to 2005 ArchivedArticles and reports: 11-624-M2006014Geography: CanadaDescription:
This paper provides an analysis of trends in business sector head office employment in Canada from 1999 to 2005. It investigates changes in the number of head offices and head office employment over this period. The paper also examines the effect of foreign ownership on head office employment. It asks how much foreign-controlled firms contribute to Canadian head office employment and employment growth and what happens to head office employment when control of a firm changes from domestic to foreign. The paper also looks at the rate at which head offices enter and exit over time with a view to ascertaining whether the loss of a head office is a rare occurrence or a relatively common event. Finally, the paper presents trends in head office employment across metropolitan areas over the past six years.
Release date: 2006-07-13 - 10. Characteristics of Growth Firms ArchivedArticles and reports: 88F0006X2006003Description:
The objective of this study was to continue the investigation into growth factors initiated by the previous project: The characteristics of firms that grow from small to medium size in collaboration with the National Research Council Industrial Research Assistance Program (NRC-IRAP). Twenty five interviews augmented the original 25 with a more heterogeneous mix of Canadian technology-based firms led to the development of a framework for assessing the technology phase of small companies (or business lines in larger companies).
Release date: 2006-05-11
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