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

Simo Leppänen*, Svetlana Ledyaeva, Riitta Kosonen

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

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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.

Original languageEnglish
Pages (from-to)499-513
JournalJournal of Industry, Competition and Trade
Volume16
Issue number4
Early online date7 Jan 2016
DOIs
Publication statusPublished - Dec 2016
MoE publication typeA1 Journal article-refereed

Keywords

  • climate
  • weather
  • competitiveness
  • Russian regions
  • foreign companies
  • manufacturing
  • foreign direct investments

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