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

Simo Leppänen (), Svetlana Ledyaeva and Riitta Kosonen
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Simo Leppänen: Aalto University
Svetlana Ledyaeva: Aalto University
Riitta Kosonen: Aalto University

Journal of Industry, Competition and Trade, 2016, vol. 16, issue 4, No 6, 499-513

Abstract: 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.

Keywords: Climate; Weather; Competitiveness; Russian regions; Foreign companies; Manufacturing; FDI; F21; F23; Q54; R10. (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1007/s10842-015-0212-x

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