Firm-Specific Determinants of Productivity Gaps between East and West German Industrial Branches
Johannes Stephan, Karin Szalai
IWH Discussion Papers,
No. 183,
2003
Abstract
Industrial productivity levels of formerly socialist economies in Central East Europe (including East Germany) are considerably lower than in the more mature Western economies. This research aims at assessing the reasons for lower productivities at the firm level: what are the firm-specific determinants of productivity gaps. To assess this, we have conducted an extensive field study and focussed on a selection of two important manufacturing industries, namely machinery manufacturers and furniture manufacturers, and on the construction industry. Using the data generated in field work, we test a set of determinant-candidates which were derived from theory and prior research in that topic. Our analysis uses the simplest version of the matched-pair approach, in which first hypothesis about relevant productivity level-determinants are tested. In a second step, positively tested hypothesis are further assessed in terms of whether they also constitute firm-specific determinants of the apparent gaps between the firms in our Eastern and such in our Western panels. Our results suggest that the quality of human capital plays an important role in all three industrial branches assessed. Amongst manufacturing firms, networking activities and the use of modern technologies for communication are important reasons for the lower levels of labour productivity in the East. The intensity of long-term strategic planning on behalf of the management turned out to be relevant only for machinery manufacturers. Product and process innovations unexpectedly exhibit an ambiguous picture, as did the extent of specialisation on a small number of products in the firms’ portfolio and the intensity of competition.
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Innovative East German industrial companies do well in comparison with others - An empirical analysis based on the IAB company panel
Bärbel Laschke
Wirtschaft im Wandel,
No. 9,
2003
Abstract
In the period of 1999/2000 the proportion of product renewals in the East German manufacturing was above the West German level. The proportion of industries with innovation activities follows the industrial structure. Most product innovations take place in the proportionately largest branches of industry, such as the consumer goods and food industries. However, the high proportion of innovative enterprises in research-intensive industries (chemistry, electrical engineering, car manufacture) is a sign of a structural change. On the basis of the data it is also shown that innovative enterprises positively stand out from non-innovative ones in their performance parameters and, with their investment and employment trends they also rank among the expanding enterprises.
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Innovation co-operations in East and West Germany: Surprising differences
Jutta Günther
Wirtschaft im Wandel,
No. 4,
2003
Abstract
This paper investigates the cooperation behavior of East German enterprises in the field of joint innovation projects. The question to be answered is whether and in how far cooperating enterprises are characterized by a stronger innovation activity and higher productivity compared to non-cooperating firms. The empirical study is based on a representative innovation survey, the Mannheim Innovation Panel (MIP). It shows - against all expectations - that East German firms are more often involved in innovation cooperation than West Germany firms. Differences with respect to the cooperation partners reflect the given structural differences between East and West Germany. Both in East and West Germany cooperating enterprises are more innovative than non-cooperating enterprises, but a productivity advantage of cooperating firms appears only in West Germany. In East Germany, non-cooperating enterprises show a slightly higher productivity than cooperating firms. Reasons for these surprising results are to be discussed in this paper.
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Significant Progress in East German Machine Construction Industry
Siegfried Beer
Wirtschaft im Wandel,
No. 2,
2003
Abstract
The restructuring of the mechanical engineering industry of the new Länder has displayed clearly positive effects. Between 1997 and 2001, productivity and turnover have increased by about 25 %. Since mid 1999 the number of employees has also gone up again. Business surveys indicate an improvement in profitability. This positive development is due to an increase in competitiveness which is based on new product lines together with more effective innovation activities. Growth has also been enhanced by the enlargement and modernisation of the capital stock and a moderate movement of wages. Despite this progress the east German engineering industry as a whole does by far not reach the productivity figures of its west German counterpart. Differences explaining this gap are found in the product structure with dominating customer specific products and in the firm size with a smaller number of employees in the East.
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Innovation cooperation in East Germany - only a half-way success?
Jutta Günther
IWH Discussion Papers,
No. 170,
2003
Abstract
The paper focuses on the question whether enterprises that engage in innovation cooperation with external partners are more innovative and thus more productive than non-cooperating firms. A comparison between East and West Germany is being made. It shows that cooperating enterprises in East and West Germany are indeed more innovative than non-cooperating firms, but there remains a clear productivity gap between East and West German cooperating firms. Furthermore, in East Germany - different from West Germany - non-cooperating firms are even more productive than cooperating firms.
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FDI as Multiplier of Modern Technology in Hungarian Industry
Jutta Günther
Intereconomics,
No. 5,
2002
Abstract
Foreign direct investment is generally expected to play a significant role as a multiplier of modern production and management know-how in Central Eastern European transition economies. The following paper examines the various mechanisms by which such technological spillover effects could in theory take place and compares them with the results of an empirical study of their practical significance for Hungarian industry.
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The significance of FDI for innovation activities within domestic firms - The case of Central East European transition economies
Jutta Günther
IWH Discussion Papers,
No. 162,
2002
Abstract
Foreign direct investment is expected to play a significant role as a multiplier of modern production- and management-know-how in Central East European transition economies. The so-called technology-spillovers are explained through externalities or extra-marketlinkages. In practice they can take place via demonstration effects, labor mobility, supplier contacts, customer contacts or networking activities. However, the empirical study on the example of Hungarian industry shows that foreign owned and domestic firms – mainly due to their strong technological disparities – build virtually separate spheres within the industrial sector. Thus, technology-spillovers do hardly appear as an innovation-stimulating means for domestic companies.
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Innovative and international – with local personnel: Results of a survey of New Economy enterprises in Saxony and Thuringia
Cornelia Lang, Ralf Müller
Wirtschaft im Wandel,
No. 12,
2001
Abstract
BT and IT firms in Saxony and Thuringia were surveyed about their recruiting activities, the scope of their product markets and their R&D activities. The major findings are: The majority of firms engage in product and process development, their product markets are not predominantly local markets, and that they recruit their labor force in the local labor market. The latter fact is explained by the existence of the modern infrastructure in higher learning and research in the new Länder (which formerly constituted the GDR). Consequently the firms are optimistic to be also able to attract highly qualified personnel in the future.The recently enacted law, which grants a number of work permits for highly qualified jobs (green card) is therefore of no great significance to these firms.
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Does the East German industry structure affect productivity development adversely?
Ralf Müller, Anita Wölfl
Wirtschaft im Wandel,
No. 3,
2000
Abstract
Innovationen werden gemeinhin als wichtiges Instrument für Produktivitätssteigerungen angesehen. Auch wenn zuletzt scheinbar der Schrumpfungsprozess der ostdeutschen Spitzentechnologie gestoppt ist, so ist die Industrie der neuen Länder weiterhin vorwiegend durch nicht FuE-intensive Branchen geprägt. Sind damit anhaltende Produktivitätsnachteile für die Zukunft vorausprogrammiert?
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Innovative Milieux: Advanced Posts of Interpenetration between the Economic System and the Science System
Peter Franz
IWH Discussion Papers,
No. 71,
1998
Abstract
A growing number of governments, political parties, and enterprises set the theme „innovation“ on their agenda and join in the global race to more competitive national economies. In this race the concept of the „innovative milieu“ serves as an important point of orientation and as a political target that, on the first glance, seems to be transferable in concrete political measures. A basic feature of innovative milieux is the quick and easy transfer of knowledge to products in demand. This speed-up in the diffusion of knowledge is not only interesting with respect to the economic advantages but also with respect to science. It is the basic thesis of this paper that innovative milieux represent special cases where the economic system and the science system interpenetrate in an extreme way. Empirical findings show that the actors of innovative milieux have a strong cultural proximity to basic attitudes and behavior within the science system. This relates to the institutionalization of trial and error, the reinforcement of exploratory behavior, the flow of information, and to a special mixture of cooperation and competition. An essential feature of innovative milieux derives from the network relations of its actors. These relations have to be balanced a) to the need to create trust and reduce uncertainty, and b) to the need to stay permeable enough for linkages with new actors from outside. With regard to time innovative milieux have to be conceived from an evolutionary perspective. This involves several steps: Development of prerequisites, consolidation, attraction of labor and enterprises from other regions. From the evolutionary perspective, too, possible factors of preventing or accelerating the „entropic death“ (Camagni 1991) of innovative milieux can be discussed. The exceptional character of innovative milieux has consequences for innovation-oriented political strategies. The self-enforcing dynamics of innovative milieux create a tendency to more economic inequality between regions (core-periphery differences). This is contradictory to political strategies in which innovation-oriented policy is applied to reach an offset between prospering and impoverished regions. In many cases a strategy starting from the assumption of an enduring non-innovative milieu seems to be more realistic and more promising. Further on, the new more direct links between enterprises and research institutes question the current shape of technology transfer institutions. Finally the potential effects of the new trend to encourage the entrepreneurship of research staff on the science system are discussed.
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