The basic idea of the project KombiFiD (an acronym that stands for Kombinierte Firmendaten für Deutschland, or combined firm-level data for Germany) that is described in detail on the web (see www.kombifid.de) is to ask a large sample of firms from all parts of the German economy to agree to match confidential micro data for these firms that are kept separately by three data producers (the Statistical Offices, the Federal Employment Agency and the German Central Bank) in one dataset. These matched data are made available for scientific research while strictly obeying the data protection law, i.e. without revealing micro-level information to researchers outside the data-producing agencies. In KombiFiD 54,960 firms were asked to agree in written form to merge firm-level data from various surveys and administrative data for the reporting years 2003 to 2006. Of the 30,944 firms that replied, 16,571 agreed. These 16,571 firms are in the KombiFiD Agreement Sample. The sample of enterprises used in the empirical investigation performed here consists of all firms from business services industries in West Germany11 in the KombiFiD Agreement Sample for which information from both data sources12 – the German business services statistics panel and the Establishment History Panel – could be linked in the KombiFiD project for 2003 to 2006. Due to the fact that the German business services statistics do not provide information about the export activities of small firms, only firms with an annual sum of turnover and other operational income greater than or equal to €250,000 are considered for the analyses. Further, the analysis includes only firms with one or more wage and salary earners. This leads to a dataset with 8,474 observations from 2,299 firms.13 Some firms reported extremely high or low values of the considered variables. To avoid bias of the descriptive overview and the econometric estimations by outliers, firms that belong to the 1st or 99th percentile of the wage or valueadded distribution or to the 99th percentile of the number of persons employed, investment or purchased goods and services for resale distribution are excluded from all computations.14 This leads finally to a dataset with 7,862 observations from 2,069 West German business services firms. Table 6.3 presents a list of all the variables described above.