Bank Credit Supply and Firm Innovation Behavior in the Financial Crisis (with Kornelius Kraft), Journal of Banking and Finance, 2020, forthcoming.We analyze the change in firms’ innovation behavior (short-term adjustment and long-term strategy) in reaction to the credit supply shock to banks in the recent financial crisis 2008/2009. Using a matched bank-firm data set for Germany, we utilize the exogenous variation caused by the interbank market disruptions on credit supply in instrumental variable estimations. Concerning the short-term innovation adjustment in 2009, our results show that (i) current innovation activities, (ii) the initiation of additional innovation and (iii) the reallocation of unused labor resources to the innovation department are affected by the shock to bank financing. We find that the effect is more pronounced for product innovation than for process innovation. Investigating the impact on the long-term innovation strategy in reaction to the crisis, we find that (iv) the sensitivity to adopting any innovation-related strategy to cope with the crisis could not be attributed to the negative bank credit supply shock.
External Financing Constraints and Firm Innovation (with Kornelius Kraft), Journal of Industrial Economics, 2019, 67(1), 91-126.We investigate the effect of individual banks affected by the recent financial crisis of 2008/2009 on the innovation activities of their business customers. Firms associated with a bank that relies strongly on the interbank market are more likely to be exposed to a credit supply shock during the financial crisis and therefore face external financing constraints. Exploiting both the extensive and the intensive margin, our difference-in-differences results imply that those firms which have a business relation to a bank with higher interbank market reliance reduce their innovation activities during the financial crisis to a higher degree than other firms. Tests for additional expenditures reveal that marketing expenditures show a lower or even no sensitivity to bank financing during the financial crisis.
The Impact of the Financial Crisis on Capital Investments in Innovative Firms (with Kornelius Kraft), Industrial and Corporate Change, 2019, 28(5), 1079-1099.This article investigates the impact of the financial crisis on decisions by innovative versus non-innovative firms regarding capital investments. This question is of particular interest, as distortions of financial markets especially affect innovative firms (i.e., firms with riskier business models) and thereby impact economic growth. The empirical test is based on German establishment data for the years 2004–2011, thus before and during the recent financial crisis. It turns out that innovative firms using external sources for investment finance reduce their capital expenditures during the financial crisis to a larger extent than (i) non-innovative firms using external finance and (ii) innovative firms not using external finance. Moreover, our results remain robust when we control for demand-side factors, test for effects of other financing sources like equity, employ different definitions of the treatment status, or vary the sample size. Finally, our study implies that innovative firms with their presumably riskier business models clearly suffered during the financial crisis in terms of access to financial markets, leading to a reduction in capital investments.
External Consultants and Innovation, Academy of Management Proceedings, 2020, 1, 13491.
Is it a good idea to publish during your PhD? Yes, but ..., Nature Behavioural and Social Sciences Community Blog, October 2019.
Digital divide, Knowledge and Innovations, Journal of Information, Information Technology, and Organizations, Vol. 8, 2013, pp. 1-24.
R&D Investments under Financing Constraints (with Kornelius Kraft)This paper tests for the sensitivity of R&D to financing constraints conditional on restrictions in external financing. Financing constraints of firms are identified by an exogenously calculated rating index. Restrictions in external financing are determined by (i) the specific time period (crisis vs. non-crisis) and (ii) the balance sheet strength of the firm’s main bank in terms of bank capital. Results of difference-indifferences estimations utilizing three time periods: 2002-2006 (pre-crisis) 2007-2009 (crisis) and 2010-2012 (post-crisis) support the theoretical prediction that financing constraints affect R&D. Moreover, we find that the effect of firm financing constraints is more intense (i) in times of stress on financial markets and (ii) when the firm faces restrictions in external financing. Additionally, our results indicate that on average the effect does not persist over time.
External Consultants and Firm Innovation (Among the best accepted papers in the 2020 AOM meeting program)This paper analyzes if and especially how external consultants affect the innovation behavior of firms. Firms face a variety of barriers which hamper organizational activities like innovation. Making use of business consultants provides firms with access to skills and knowledge to improve firm operations. Thus, the hiring of external consultants serves as a measure for firms to increase their innovation outcomes. Results for a sample of firms from 32 countries shows that utilizing external consultants indeed leads to a higher probability to carry out an innovation. This holds for product and process innovation, but also for innovation in management and marketing. Additional results show that the impact of the number of visits on innovation is found to be inversely-U-shaped. While the probability of performing an innovation is the highest at the turning point of the inverted-U, the first consultant visit provides the largest benefit. Thus, the findings imply that more is not always better. In addition, firms, which seek business skill or project management improvements, benefit particularly from hiring external consultants.
Do Managerial Incentives Facilitate Collusion? (with Anja Rösner)The decision to participate in cartels is often made by managers. Thus, the corporate governance mechanisms which incentivize them to align their interest with that of the firm’s shareholders play a major role. Consequently, we investigate empirically how manager remuneration schemes impact their incentives for collusion, cartel formation and stability. We use a dataset that allows to identify the managers remuneration schemes as well as cartels within the United States. Exploiting this rich dataset, we find that higher long-term incentives of managers indeed affect collusion. Our findings show that a higher degree of manager's long-term incentives lead to (i) a higher probability of a firm's cartel participation, (ii) a higher probability of forming a cartel and (iii) no effect on the termination of a cartel.
The Impact of a New Workplace Technology on Employees (with Alexander Lammers)This paper investigates the impact of the implementation of a new workplace technology on worker outcomes such as overtime, training and perceived productivity. While the effects of new technologies on firm outcomes are widely discussed, the impact on workers still remains debated. Detailed worker-level data for Germany allows us to compare the outcomes for workers which are exposed to a change in workplace technologies to the group of workers which are not exposed in the periods before and after the introduction. Moreover, we exploit the perception of the new technology by employees to determine the dependency of the effects on this dimension of heterogeneity. Our estimates imply strongest impacts of new technologies in the first year of the implementation for overtime, training and perceived productivity. In addition, we show that the positive effects of a new technology vanish after the introduction period. Finally, changes in worker outcomes are dependent on the nature of the introduced technology. Positive effects on real worker outcomes therefore primarily occur when workers also tend to perceive it.