Alexander Eickelpasch

R&D Behavior of German Manufacturing Companies During the 2008/09 Recession

This paper investigates to what extent the R&D behavior of manufacturing companies was influenced by the 2008/09 crisis. Based on a broad official data set for German manufacturing companies, only a few companies that engaged in R&D during 2008 gave it up in the following year. Some companies even started R&D during crisis. R&D expenditures declined in 2009 compared to 2008, but expanded in 2010. The development of R&D expenditures was less volatile than sales. Probit analyses show that the occurrence of R&D in 2009 is very much determined by engagement in R&D in 2008 and that changes in demand are not relevant. However, fluctuation in demand proved to be relevant in the regressions computed where the intensity of R&D expenditures was the dependent variable. This result suggests that companies reacted counter cyclically in 2008/09, i.e. the reduction in R&D was smaller than the decline in demand, or the expansion of R&D expenditures was greater than the change in demand. Similar regressions for using R&D staff as the dependent variable did not find any influence of changes in demand. The results suggest that companies see R&D as a longer term task necessary to retain competitiveness.

Firm's Evaluation of Location Quality: Evidence from East Germany

Abstract Our study provides evidence for firms’ evaluation of location quality. We use a 2004 survey of 6,000 East German firms that contained questions on the importance and assessment of 15 different location factors ranging from closeness to customers and suppliers, transport infrastructure, and proximity to research institutions and universities, as well as questions about the local financial institutions and region’s “image”. The results show (1) a great deal of heterogeneity in terms of which firm- or regional-level characteristics are important in the evaluation of a specific location factor, (2) that the model’s explanatory power is, overall, low and thus neither location characteristics nor internal factors are fully reflected in the perceptions of location quality, (3) that a firm’s business situation and whether a location factor is considered important have explanatory power for perception. One policy-relevant conclusion that we derive from these findings is that location policy should consider firms’ perception of a specific location in addition to improving the actual attributes of that location.