German Manufacturing Industry Research Articles

Spillovers from publicly financed business R&D: some empirical evidence from Germany

This paper investigates the effects of interindustry R&D spillovers from publicly financed business R&D on private R&D efforts and productivity using data of West German manufacturing industries. The results suggest that it is important to distinguish between the effects of spillovers from privately and publicly financed business R&D. In particular, estimation results provide evidence of productivity-enhancing effects of spillovers from privately financed R&D while results are less clear-cut for publicly financed R&D. Moreover, there is some empirical evidence that private R&D efforts of higher-technology industries are stimulated by spillovers from privately financed R&D but not by spillovers from publicly financed R&D. However, public funding of R&D in higher-technology industries seems to induce private R&D investments within these industries.

The Adoption of Business-to-Business E-Commerce: Empirical Evidence for German Companies

Although in its infancy, one promising application of Internet technology for firms is so-called Internet commerce or electronic commerce. This paper analyses the determinants of B2B (business-to-business) adoption borrowing from the literature on the adoption of new technologies and considering factors like firm size, corporate status, human capital and international competitive situation. An ordered probit model is applied to a data set containing about 3,000 enterprises from the German manufacturing industry and the German services sector in the year 2000. We find positive and significant effects of firm size, the share of highly qualified employees and the export share. An IT-intensive production process enhances the probability of a broad use of B2B e-commerce. An important influence on the use of B2B is the bandwagon effect, implying that firms are more likely to use this new Internet application if others within the same industry likewise do it. We find no significant effects of firm age and of the fact that a firm belongs to a group of companies as measures of a firm's flexibility and financial power.

Determinants of Strategic Partnerships in R&D - A Regional Comparison among the German Federal States

This paper investigates R&D partnerships among companies in the German manufacturing industry. Companies work together in R&D partnerships and put forward joint research efforts, but do not give up their economic independence. The question is why companies engage in R&D partnerships and under what circumstances these partnerships are more or less successful. We analyze these questions empirically and put special emphasis on possible contributions of R&D partnerships to diminish regional disadvantages of Eastern German companies. The data were collected in 2001 and cover 886 companies in the manufacturing and industry-related service sectors. Firstly, it can be shown that there are no significant differences in the probability of the participations of Eastern and Western German companies. Secondly, we find that companies participate in R&D partnerships not to substitute for their own R&D activities but to pool resources. Companies that are involved in R&D partnerships are more innovative than others and the R&D partnerships help the the companies to stay competitive, i.e. to produce a more modern range of products and services. Thirdly, we find a particularly important role of universities in R&D partnerships of East Germany companies, which is partly due to governmental subsidies which were obviously efficient in the sense that they increased these particular types of public-private-partnerships. However, it remains to be seen whether they survive without governmental subsidies.

A Dynamic Heterogeneous Labour Demand Model for German Manufacturing

This paper presents an application of the Generalised Error Correction Model (GECM) for heterogeneous factor demands based on the quadratic cost function. Using data for 26 West German manufacturing industries over the period 1976-1995, it turns out that less general specifications such as the partial adjustment and the static AR(1) model are rejected. Furthermore, both shortrun and long-run labour demands of different skill classes are inelastic. Unskilled labour is found to have a somewhat higher wage elasticity in absolute terms than medium-skilled labour. A small part of shift in demand away from unskilled labour can be explained by the substitutability relationship between intermediate materials and unskilled labour. Between 6 and 13 percent of the observed shift towards high-skilled labour can be explained by capital accumulation.

R&D cooperation and innovation activities of firms—evidence for the German manufacturing industry

The aim of the paper is to investigate in a simultaneous equation framework the role of R&D cooperation in the innovation process—in context with other factors—from two specific aspects. First, analysis focuses on the impact of R&D cooperation on firms’ innovation input and output. Second, analysis is undertaken as to how the number of cooperation partners affects the innovation behaviour of firms. Starting with the discussion of theoretically expected effects of successful R&D cooperation on the innovation activities of firms, the importance of inter-organizational arrangements in R&D is empirically investigated in respect of firms in the German manufacturing industry. The estimation results can be summarized as follows: joint R&D is used to complement internal resources in the innovation process, enhancing the innovation input and output measured by the intensity of in-house R&D or the realization of product innovations. On the input side, the intensity of in-house R&D also stimulates the probability and the number of joint R&D activities with other firms and institutions significantly.

Interpretation des Sourcings der Informationsverarbeitung: Hintergründe und Grenzen ökonomischer Einflussgrößen

This article aims to develop a more profound understanding of the heterogeneous behaviour in the field of Information Systems (IS) Outsourcing in German organizations. Based on multiple case studies in the German Manufacturing Industry, it demonstrates that resource deficits serve as an overriding contingency for the outsourcing decision. However, specific knowledge on internal business processes may lead to production cost advantages for the firm and, thus, inhibits the outsourcing of IS functions. Furthermore, cultural variables like distrust and sociability serve as additional contingencies for explaining heterogeneous outsourcing patterns.

R&D and productivity: Internal vs. external R&D - evidence from west german manufacturing industries

The paper explores the productivity effects of investment in external (contract) vs. internal (in-house) R&D in a sample of West-German Manufacturing Industries. The results provide strong evidence of a positive relationship between productivity and the share of external R&D in total R&D. This result is robust to alternative econometric specifications. Thus, findings suggest that the decision between internal and external R&D does matter. Moreover, results imply a nonlinear relationship between productivity and the share of external R&D for higher-technology industries, hinting at decreasing productivity effects of an increasing share of external in total R&D.

Labour Demand in Germany: An Assessment of Non-Wage Labour Costs

The data indicate that non-wage labour costs in Germany have reached a record high in recent years. From 1972 to 2001, the ratio of non-wage labour costs to direct compensation in West German manufacturing industry rose from 55.6 per cent to 81.2 per cent. The topic of non-wage labour costs is increasingly being discussed among and between the political parties because non-wage labour costs are likely to have major negative effects on employment. We follow the real options approach, which allows us to investigate the value to a firm of waiting to adjust labour when the firm´s revenues are stochastic and adjustment costs are sunk. Simulation exercises show that the interaction between hiring and firing costs, non-wage labour costs and uncertainty can have important ramifications for employment dynamics.

A dynamic heterogeneous labour demand model for German manufacturing

This paper presents an application of the Generalised Error Correction Model (GECM) for heterogeneous factor demands based on the quadratic cost function. Using data for 26 West German manufacturing industries over the period 1976-1995, it turns out that less general specifications such as the partial adjustment and the static AR(1) model are rejected. Furthermore, both shortrun and long-run labour demands of different skill classes are inelastic. Unskilled labour is found to have a somewhat higher wage elasticity in absolute terms than medium-skilled labour. A small part of shift in demand away from unskilled labour can be explained by the substitutability relationship between intermediate materials and unskilled labour. Between 6 and 13 percent of the observed shift towards high-skilled labour can be explained by capital accumulation.

The German manufacturing industry faces globalization: Old achievements, new challenges

While the German manufacturing industry is internationally renowned and often seen as the backbone of German economic development, it has encountered some obstacles in the past few years. These obstacles are related with the emergence of new competitors, the shifts of economic activity in Europe due to economic integration and the challenge of German unification. This paper analyzes the historical development of the German manufacturing industry. By discussing the problems of German manufacturing industry in a globalized world, conclusions for necessary reforms can be drawn.

Tests of Representative Firm Models: Results for German Manufacturing Industries

Many studies of producer behavior consider cost and input demand functions derived from microeconomic theory and estimate them on the basis of aggregate data. If the characteristics of the firms differ, the negligence of heterogeneity can lead to estimation bias. An alternative is to restrict individual behavioral functions to being linear in the firm specific parameters. The aim of this paper is to describe aggregate producer behavior without placing too strong restrictions on functional form and to explicitly account for firm heterogeneity. Estimation for German manufacturing sectors confirms that neglected heterogeneity is an important source of bias in representative firm models.

Product and Process Innovation as a Response to Increasing Imports and Foreign Direct Investment

The paper analyses the hypotheses that imports and inward foreign direct investment (FDI) have positive effects on the innovative activity of domestic firms because competition on the domestic market is thereby increased, and domestic firms have to perform more efficiently to maintain their market position. Chamberlain's random effects probit approach which may account for individual heterogeneity depending on exogenous variables is used to analyse a panel data set containing 1270 firms of the German manufacturing industry from 1984 to 1988. It turns out that both import share and FDI-share have positive and significant effects on product and process innovations.

Capital-skill complementarity in West German manufacturing

Capital-skill complementarity is tested for two different definitions of skill, using data from 32 West German manufacturing industries from 1975–1990. Using the Kmenta approximation for the CES function provides strong support for complementarity between white collar workers and capital. On the other hand, when “skill” is defined as skilled white collar and blue collar workers, we find essentially no evidence for complementarity. This surprising result suggests that the official classification of skilled production workers does not capture the planning activity most complementary to increasing capital intensity and technological progress.

A Comparison of Company Size in the British and German Manufacturing Industries in the early 1960s

A Comparison of Company Size in the British and German Manufacturing Industries in the early 1960s

The Post-Entry Performance of New Small Firms in German Manufacturing Industries

While recent years have witnessed a growing interest in research on market entry by new firms, evidence regarding their postentry performance is scarce. This paper uses longitudinal data for small firms that entered German manufacturing industries between 1979 and 1982 and monitors their performance until 1990. Entrants face a high risk of failure, hazard rates tend to increase during the first years and to decrease afterwards. Decline of employment in a cohort due to exits and shrinking firms is compensated by growing survivors. No clear-cut nexus between start-up size and probability of survival shows up. Copyright 1994 by Blackwell Publishing Ltd.

Public capital and the demand for private inputs

This paper investigates the impact the provision of public capital has on the demand for private inputs using a cost function with public capital included as a fixed unpaid factor of production. The productivity effects of public capital provision are recovered by using duality theory. The model is applied to a panel of 31 two-digit industries of the West German manufacturing industry. It is shown that private and public capital are complements, whereas a substitutive relation emerges for labour. The empirical evidence suggests that the provision of public capital has a stabilizing but steadily decreasing impact on private input demand.

Group work in the american and german nonautomotive metal manufacturing industry

AbstractThis article is a summary of new trends in the American and German nonautomotive metal manufacturing industry. The emerging process technologies are examined: cellular manufacturing in the case of the U.S. and production islands in the case of Germany. The focus is on the work organization that envelops these technologies, particularly the notion of group work, which is a central part of these new process technologies.

Searching for the "Productivity Slowdown": Some Surprising Findings from West German Manufacturing

We test the hypothesis of a negative long-term trend and/or a structural break in total factor productivity (TFP) after the first oil price shock for West German manufacturing industries within an econometric model based on a flexible cost function with capital as a quasi-fixed factor. After adjusting TFP growth for scale economies and varying capacity utilization this hypothesis is not supported by our empirical findings for the great majority of industries studied, whereas the hypothesis that the (log-)level of TFP follows a random walk with drift is not rejected by various statistical tests. -Authors

Productivity Levels in British and German Manufacturing Industry

Relative levels of labour productivity are estimated to have been about 22 per cent higher in German than in British manufacturing in 1987. The German productivity advantage was most pronounced in non-electrical engineering, vehicles and metals. The British performance was relatively better in food, drink and tobacco and textiles and productivity levels appear to be about equal in the two countries in chemicals and electrical engineering. About 80 per cent of the productivity gap in aggregate manufacturing can be accounted for by differences in the levels of both physical and human capital. The aggregate productivity ratio of 22 per cent is lower than that found for 1968. The time pattern of relative productivity in the intervening two decades shows a considerable increase in the 1970s followed by a rapid narrowing of the productivity gap in the 1980s.

The returns to labour services in West German manufacturing industry

Production functions distinguishing between the stock and utilisation dimensions of factor (labour and capital) inputs are critically surveyed. An extension to the existing literature is suggested whereby ‘normal’ and overtime hours are separated within an appropriate non-linear functional specification. The econometric performance of this model is then compared with the main alternatives from the existing literature. The empirical work is based on pooled cross-section/time-series data which refer to West German manufacturing industries, 1968–1978. Estimates of the returns to labour services are also discussed in the light of related theoretical aspects of factor demand functions.