Firms' heterogeneity and performance in manufacturing during the Great Recession

Abstract

This paper highlights how the heterogeneity of manufacturing firms impacted their performance and survival during the “Great Recession”. The findings indicate that firms that assumed a strategically proactive and innovative strategy in the pre-crisis period showed better economic performance during the crisis in terms of both sales and value added. The evidence also shows that the youngest firms and those that had a lower level of financial exposure were favored in terms of performance. Finally, the results also confirm the increased importance of different technological regimes. In contrast, survival estimates demonstrate the non-significance of pre-crisis strategic profiles: ceteris paribus, the results indicate that the most innovative, internationalized and dynamic firms did not register a greater likelihood of survival than other businesses. This result casts doubt on the efficiency and direction of the selection process.