This paper uses panel data on cross-border migration and transactionlevel trade for Swiss municipalities to identify the effect of migration networks on specific margins of the integration of firms in global value chains. We find that the stability of an international supplier-buyer relationship is strongly associated with a-priori knowledge about the supplier's origin as measured by the migrant network with the same country of origin present in the buyer's immediate environment (here, a municipality). Not only do firms engage in more stable input trading relationships and intensify relationships in terms of input trading volume, but they reduce the total number of suppliers in a given country in response to an increase of immigration from there. These results are in line with a theoretical framework where firms' sourcing strategies are subject to incomplete information. Firms diversify their foreign supplier network in order to be less susceptible to potential bad shocks. Once informational barriers are lifted, firms contract fewer suppliers but purchase a larger volume from each of them.
Do differences in border price adjustment by currency of invoicing carry over to allocations? We document the cross-industry variation in the response of Swiss export prices and export values by currency of invoicing of border prices in the aftermath of the large and abrupt Swiss franc (CHF) appreciation in January 2015. Industries with higher CHF-invoicing shares (and a larger increase in foreign-currency denominated prices) experienced substantially weaker export growth in the two-year period after January 2015.
Persistent differences in entrepreneurial activity between regions and countries remain unexplained. This paper argues that cultural heritage is an important determinant. We exploit a quasi-experimental setting comparing entrepreneurial activities of individuals with different cultural ancestry from within Switzerland but who live in the same municipality today and are hence exposed to the same economic and institutional environment. We find that individuals with cultural origin on the German-speaking side of the Swiss language border found 20% more firms than their counterparts with cultural origin on the French-speaking side-no matter if they currently live in the German-speaking or French-speaking region. These newly founded firms are identical in terms of survival rate, industry composition, legal form, and firm size, independent of the cultural origin of firm founders. A model of entrepreneurial choice suggests that the empirical patterns of firm entry and performance are more likely driven by differences in risk aversion or preferences for entrepreneurship rather than by skill.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.