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Weather as a Competitive Factor between Local and Foreign Manufacturing Companies in Russia

Author

Listed:
  • Simo Leppänen

    (Aalto University)

  • Svetlana Ledyaeva

    (Aalto University)

  • Riitta Kosonen

    (Aalto University)

Abstract

Globalisation has sparked academic interest in companies’ competitive factors and a myriad of internal and external competitive factors have been studied. However, to our knowledge the weather of the host country has not been under study even though weather has been demonstrated to affect economic activity. This paper utilises a company-level panel data to analyse if weather has an impact on domestic and foreign manufacturing companies’ operations in Russia. Temperature was identified to have a non-linear effect on foreign companies’ revenues, such that a warmer year raises revenues in colder regions while balancing out in warmer regions and actually has a negative effect in the hottest regions. For local Russian companies, we discovered an opposite, but less robust effect. This and home country climate based analysis support the hypothesis that foreign companies benefit from more pleasant weather in the local colder climate while the impact is not so critical for the local companies or foreign companies from countries with similar climate to Russia.

Suggested Citation

  • Simo Leppänen & Svetlana Ledyaeva & Riitta Kosonen, 2016. "Weather as a Competitive Factor between Local and Foreign Manufacturing Companies in Russia," Journal of Industry, Competition and Trade, Springer, vol. 16(4), pages 499-513, December.
    • Handle: RePEc:kap:jincot:v:16:y:2016:i:4:d:10.1007_s10842-015-0212-x
    DOI: 10.1007/s10842-015-0212-x
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    References listed on IDEAS

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    2. Broadman, Harry G. & Recanatini, Francesca, 2001. "Where has all the foreign investment gone in Russia?," Policy Research Working Paper Series 2640, The World Bank.
    3. Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2014. "What Do We Learn from the Weather? The New Climate-Economy Literature," Journal of Economic Literature, American Economic Association, vol. 52(3), pages 740-798, September.
    4. S. Seo, 2013. "An essay on the impact of climate change on US agriculture: weather fluctuations, climatic shifts, and adaptation strategies," Climatic Change, Springer, vol. 121(2), pages 115-124, November.
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    6. Ledyaeva, Svetlana & Karhunen, Päivi & Kosonen, Riitta, 2013. "Birds of a feather: Evidence on commonality of corruption and democracy in the origin and location of foreign investment in Russian regions," European Journal of Political Economy, Elsevier, vol. 32(C), pages 1-25.
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