Get access

Firm Growth, European Industry Dynamics and Domestic Business Cycles


  • Harald Oberhofer

    1. University of Salzburg and Salzburg Centre of European Union Studies (SCEUS)
    2. The Austrian Center for Labor Economics and the Analysis of the Welfare State
    Search for more papers by this author


Based on the empirical firm growth literature and on heterogeneous (microeconomic) adjustment models, this paper empirically investigates the impact of European industry fluctuations and domestic business cycles on the growth performance of European firms. Since the implementation of the Single Market Program the 27 EU member states share a common market. Accordingly, the European industry business cycle is expected to become a more influential predictor of European firms’ behavior at the expense of domestic fluctuations. Empirically, the results of a two-part model for a sample of European manufacturing firms reject this hypothesis. In addition, exporting firms and subsidiaries of multinational enterprises constitute the most stable firm cohort throughout the observed business cycle.

Get access to the full text of this article