Productivity or Unexpected Demand Shocks: What Determines Firms' Investment and Exit Decisions?

Kumar, Pradeep; Zhang, Hongsong

doi:10.1111/iere.12354

Cited by 14 publications

(9 citation statements)

References 41 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Regional Science and Urban Economics 1 ics such as Schumpeterian/evolutionary (Lööf & Heshmati, 2002;Luo, 2009), neoclassical (e.g., Golombek & Raknerud, 2018), labor market (e.g., Bhaskar & To, 1999) and industrial organization perspectives (e.g., Kumar & Zhang, 2019). Other recurrent perspectives were the resource-based view and dynamic capabilities (e.g., Bruyaka & Durand, 2012), resource dependence theory (e.g., Gras & Mendoza-Abarca, 2014), and internationalization theories (e.g., Colantone & Sleuwaegen, 2010).…”

Section: Production and Operations Managementmentioning

confidence: 99%

“…The deregistration can be from an official Business Register held and elaborated by National Statistical Offices (as in Cefis & Marsili, 2006) or it could be a "deregistration" from other commonly used datasets, such as Bureau van Dijk's Orbis, Amadeus, or Aida that report the records from firms' financial statements. In these latter cases, researchers infer the exit of the firms making assumptions regarding firms' behavior, like stopping production operations for a certain time period (Jensen & Miller, 2018;Kumar & Zhang, 2019) or not registering in Orbis or Amadeus any sales or assets for more than a few consecutive years. For example, in Bennett and Hall (2020), "deregistration" from Orbis is considered when no sales and no assets were recorded for at least 3 consecutive years.…”

Section: Exit As a Homogeneous Phenomenonmentioning

confidence: 99%

“…Kim et al (2015) study the effect of the Korean crisis in 1997-1998 on small firms holding foreigncurrency-denominated debt. Carreira and Teixeira (2016) Kumar and Zhang (2019) who explore the effects of productivity and demand shocks on exit. Finally, the role of macroeconomic instability on firms' exit is discussed by Rozo (2018) and by Bhattacharjee et al, (2009).…”

Section: Macro Factorsmentioning

confidence: 99%

See 2 more Smart Citations

Understanding firm exit: a systematic literature review

et al. 2021

View full text Add to dashboard Cite

We investigate the corpus of literature on firm exit by means of a systematic literature review (SLR) which yields a final sample of 142 journal articles for the period 1991–2020. The phenomenon of firm exit is explored from a variety of perspectives: business exit; exit at the individual entrepreneur level; exit from specific markets; exit from foreign markets; and the role of exit for industrial dynamics conceived more broadly. Special attention is given to the various exit routes, including voluntary liquidation, mergers and acquisitions (M&A), initial public offerings (IPO), and of course bankruptcy. The SLR sets the scene for the Special Issue papers that are presented towards the end, and we conclude with some suggestions for future research.The Plain English Summary This article develops a systematic literature review around three decades of firm exit research, patterns, developments, and intriguing gaps. In this paper, we systematically review 142 studies on firm exit from various perspectives, identify major patterns, and outline the debate around firm exit. We propose reflections useful for scholars willing to engage in firm exit research in the future and set the scene for the special issue papers. Overall, this work shows the remarkable progress made in the area of firm exit that has evolved from the view of exit as a homogenous event signaling failure to a vision of exit as a heterogenous event. Exploring the sources of heterogeneity of exits from various perspectives could offer promising paths for future research.

show abstract

Section: Production and Operations Managementmentioning

confidence: 99%

Section: Exit As a Homogeneous Phenomenonmentioning

confidence: 99%

Section: Macro Factorsmentioning

confidence: 99%

See 1 more Smart Citation

Understanding firm exit: a systematic literature review

et al. 2021

View full text Add to dashboard Cite

show abstract

“…Our measure of demand shocks includes features related to product quality, location, checkout speed, the courteousness of store employees, parking, bagging services, and cleanliness. To recover revenue productivity and demand shocks, we rely on two output equations -product sales and market share index functions -and store's demand functions for labor and inventories accounting for investment in technology, product variety and the local environment in which a store operates (Doraszelski and Jaumandreu, 2013;Kumar and Zhang, 2018;Maican and Orth, 2019). 5 Market shares contain information about demand shocks, and rich sales data for the universe of stores allow us to use local market shares together with demand for inventories to recover external demand shocks.…”

Section: Introductionmentioning

confidence: 99%

“…To avoid stock-outs, retailers spend more money on financing inventories than on advertising. Kumar and Zhang (2018) use the cost of goods to recover the distribution of demand shocks in manufacturing but do not model product variety.…”

Section: Introductionmentioning

confidence: 99%

Determinants of economies of scope in retail

Maican

Orth

2021

International Journal of Industrial Organization

View full text Add to dashboard Cite

This paper studies the determinants of economies of scope and quantifies their impact on the extensive and intensive product margins in retail. We use a framework based on a multiproduct technology to model stores' incentives to expand product variety. Using novel Swedish data on product categories and stores, we find that high-productivity stores offer more product categories and sell more of all product categories. Stores with high demand shocks specialize in fewer product categories and sell more top-selling product categories. Policy simulations show that investments in technology increase the extensive and intensive product margins, especially benefitting stores in urban markets because of their productivity advantage. Learning from demand to increase productivity and variety is crucial in rural markets. Reducing the role of uncertainty in both productivity and demand shocks endorses product variety and raises sales and market share.

show abstract