nep-bec New Economics Papers
on Business Economics
Issue of 2005‒01‒23
thirteen papers chosen by
Christian Calmes
Universite du Quebec en Outaouais

  1. How is Macro News Transmitted to Exchange Rates? (December 2003) By Martin D. D. Evans(Georgetown University and NBER) and Richard K. Lyons(U.C. Berkeley and NBER, Haas School of Business)
  2. Marketing as an entrance barrier into the fashion market By Pedro Cosme Costa Vieira
  3. Are you experienced? Prior exeprience and the survival of new organizations By Michael S. Dahl; Toke Reichstein
  4. "Best Practices?in spite of Performance" Just a matter of Imitation? By Paauwe, J.; Boselie, P.
  5. Personnel training: a theoretical and empirical review By Ericson, Thomas
  6. Self-Selection, Immigrant Public Finance Performance and Canadian Citizenship By DeVoretz, Don J.; Pivnenko, Sergiy
  7. The Part-Time Wage Penalty: A Career Perspective By Russo, Giovanni; Hassink, Wolter
  8. Joint Estimation of Price-Cost Margins and Union Bargaining Power for Belgian Manufacturing By Dobbelaere, Sabien
  9. Effort-based career opportunities and working time By Massimiliano BRATTI; Stefano STAFFOLANI
  10. A Matter of Life and Death: Innovation and Firm Survival By Elena Cefis, Orietta Marsili
  11. Modular Production Networks in Electronics: The Nexus between Management and Economics Research By Byron Gangnes; Ari Van Assche
  12. Determinants of Union Membership in 18 EU Countries: Evidence from Micro Data, 2002/03 By Schnabel, Claus; Wagner, Joachim
  13. Why Is China So Competitive? Measuring and Explaining China’s Competitiveness By F. Gerard Adams; Byron Gangnes; Yochanan Shachmurove

  1. By: Martin D. D. Evans(Georgetown University and NBER) and Richard K. Lyons(U.C. Berkeley and NBER, Haas School of Business) (Department of Economics, Georgetown University)
    Abstract: This paper tests whether macroeconomic news is transmitted to exchange rates via the transactions process and if so, what share occurs via transactions versus the traditional direct channel. We identify the link between order flow and macro news using a heteroskedasticity-based approach, a la Rigobon and Sack (2002). In both daily and intra-daily data, order flow varies considerably with macro news flow. At least half of the effect of macro news on exchange rates is transmitted via order flow. Classification-JEL Codes:
  2. By: Pedro Cosme Costa Vieira (Faculdade de Economia do Porto)
    Abstract: In this paper I intend to model a firm decision of entrance into a profitable fashion market where fashion results from the existence of positive interdependence between buyers utility functions. I conclude theoretically that i) when incumbent firm has an aggressive strategy it sets a marketing limit strategy that do not permit the other firm to enter the fashion market and that ii) when incumbent firm accommodates the other firm a la Cournot there is no pure strategy Nash equilibrium. The properties of the model seem to be in accordance with the persistence in time of fashion brands.
    Keywords: Fashion, Marketing, Utility interdependence, Entrance barrier
    JEL: L13 M31
    Date: 2005–01–17
  3. By: Michael S. Dahl; Toke Reichstein
    Abstract: This paper investigates the relationship between the level of experience of managers and founders, and the likelihood of survival of their new firms. We take advantage of a comprehensive dataset covering the entire Danish labor market from 1980-2000. This is used to trace the activities of top ranked members of start-ups prior to their founding, and follow the fate of these firms. More specifically, we compare the survival of spin-offs from surviving parents, spin-offs from exiting parents, and other start-ups. Moreover, we investigate whether firms managed and founded by more experienced teams with higher levels of industry-specific experience are more likely to survive. Distinguishing between survivors and firms that have been acquired, we find that spin-offs from a surviving parent company combined with and industry-specific experience, positively affects the likelihood of survival. We also find that spin-offs from parent companies that exit are less likely to survive than either spin-offs from surviving parents or other start-ups. These findings support the theoretical arguments that organizational heritage is important for the survival of new organizations. We found no similar significant results when comparing exits with firms that have been acquired.
    Keywords: Organizational routines; Industry-specific experience; Survival of new firms; Spin-offs
    JEL: L25 M13 L60
    Date: 2005
  4. By: Paauwe, J.; Boselie, P. (Erasmus Research Institute of Management (ERIM), Erasmus University Rotterdam)
    Abstract: In this paper the focus is on how organizations select, adapt and retain best practices in HRM. Based on recent developments in two streams of theoretical thinking, i.e new institutionalism and strategic management (especially co-evolution and absorptive capacity), this paper contrasts economic rationality with normative rationality in the selection, adaptation and retention process. In this way we are able to construct the life cycle of a HRM best practice, the way in which companies differ in their speed of selection and adoption of best practices, and the consequences this has for whether or not being able to achieve a competitive advantage. After presenting and describing our framework for the adoption and life cycle of best practices in the field of HRM, a range of hypotheses is presented to be tested for in follow-up research.
    Keywords: HRM;best practices;adoption;
    Date: 2005–01–10
  5. By: Ericson, Thomas (Gothenburg School of Economics and Commercial Law)
    Abstract: This report provides an introduction to personnel training (on-the-job training) literature in the economics field. Theoretical models dealing with the initiation of training programmes and their effects on pay at the individual level are discussed, and empirical research on wage effects is reported. In addition, there is an overview of sources of data and the extent of personnel training in the EU and the United States.
    Keywords: Training; human capital; investment; wage effect
    JEL: J24 J31
    Date: 2004–05–26
  6. By: DeVoretz, Don J. (RIIM, Simon Fraser University and IZA Bonn); Pivnenko, Sergiy (RIIM, Simon Fraser University)
    Abstract: This paper consists of two parts focusing on the immigrant’s decision to acquire Canadian citizenship, and her subsequent performance as a taxpayer and recipient of public finance transfers. Our results support the view that selectivity bias appears in Canadian immigrant citizenship decisions and varies by immigrant gender and source country groups. Our Oaxaca decomposition results demonstrated the importance of the human capital endowment in explaining selectivity corrected citizenship -non-citizenship earnings differences. Next, we confirmed the standard results that the naturalization decision is conditioned by the expected wage gain , level of education, marital status, age and presence of children. At the macro level, our study focused on the implications of Canadian citizenship for the lifetime public finance contributions by naturalized immigrants. All immigrants, regardless of their source country group and citizenship status, made a positive contribution to Canada’s treasury circa 1996 over their life cycle. Naturalized citizens from OECD countries contributed the largest public finance transfers exceeding the corresponding value for the Canadian -born by more than $14,000. In addition, naturalized citizens made higher net contributions than their non-citizen counterparts regardless of source country. The relatively poor public finance performance of non -citizens was explained by their lifetime low income and low tax payments.
    Keywords: citizenship, immigration, public finance, Canada
    JEL: J61 J68 F22
    Date: 2005–01
  7. By: Russo, Giovanni (Utrecht University); Hassink, Wolter (Utrecht University and IZA Bonn)
    Abstract: Part-time employment has become an extremely popular work arrangement in the Netherlands because it renders employment compatible with non-work activities. We posit that there may be a downside to part-time employment, which is related to its negative effects on workers’ career. This may be the case when firms use promotions to stimulate skill acquisition and human capital accumulation or when they base their work incentive schemes on performance measures that are affected by the number of hours worked or when they screen workers on the basis of the number of hours worked. Because promotions are an important source of wage growth, the low incidence of promotion among part-time workers may contribute to the emergence of the part-time wage penalty (i.e., the wage difference between a part-time worker and an otherwise equal full-time worker) in due time. Consistent with this view, we find that (male and female) workers in part-time jobs are characterized by a lower incidence of promotion relative to workers in full-time jobs and that promotions account for a wage growth of eight log points. Moreover, we find that the part-time wage penalty does not arise at the onset of a career as young workers join the labor market but that it tends to develop over time as labor market experience and the effect of missed promotions cumulate.
    Keywords: wages, wage gap, part-time employment, promotions
    JEL: J31 J24 J22
    Date: 2005–01
  8. By: Dobbelaere, Sabien (SHERPPA, Ghent University, LICOS Centre for Transition Economics, K.U. Leuven and IZA Bonn)
    Abstract: This paper extends Hall's (1988) methodology to analyse imperfections in both the product and the labour market for firms in the Belgian manufacturing industry over the period 1988- 1995. We investigate the heterogeneity in price-cost mark-up and workers' bargaining power parameters among 18 sectors within the manufacturing industry as well as the relationship between both para meters. Using a sample of more than 7 000 firms, our GMM results indicate that ignoring imperfection in the labour market leads to an underestimation in the price -cost margin evaluated at perfect competition in the labour market. These findings are confirmed in the sectoral analysis. Sectors with higher workers' bargaining power typically show higher price-cost margins.
    Keywords: efficient bargaining, bargaining power, market power, price -cost margins
    JEL: C23 D21 J50 L13
    Date: 2005–01
  9. By: Massimiliano BRATTI; Stefano STAFFOLANI
    Abstract: In this paper we describe the hypothesis of effort-based career o pportunities as a situation in which profit maximizing firms crea te incentives for employees to work longer hours than the bargain ed ones, by making career prospects dependent on working hours. W hen effort-based career opportunities are effective, they raise w orking time and output per worker reducing workers’ utility. A fi rst attempt is made to empirically estimate the relationship betw een hours worked and the expected opportunities of promotion usin g the British Household Panel Survey data set. Our analysis shows that the perceived probability of promotion increases with worki ng time and that this result is robust to various econometric spe cifications
    Keywords: bargaining, career, personnel management, promotion, welfare, working time
  10. By: Elena Cefis, Orietta Marsili
    Abstract: This paper examines the effects of innovation on the survival of manufacturing firms in the Netherlands. The demographics of firms according to their innovative performance and type of innovation are traced by using the Business Register population of all firms active in the Netherlands and the Community Innovation Survey. Through estimation of a parametric duration model, we observe that firms do benefit of an innovation premium that extends their life expectancy, independent of firm- specific traits such as age and size. Especially process innovation seems to have a distinctive effect on survival. Furthermore, our results confirm that survival chances increase with age and the growth rate of a firm, the latter representing a more crucial factor than the initial size. Finally, sectors at high intensity of technology, that is, science based and specialised suppliers are most favourable environments to the survival of firms.
    Keywords: Firm Survival, Innovation, Firms Exit, Duration models.
  11. By: Byron Gangnes (Department of Economics, University of Hawaii at Manoa); Ari Van Assche (Department of Economics, University of California at Santa Cruz)
    Abstract: In the last two decades, the electronics industry has evolved from a vertically integrated in-dustry to a vertically segmented one. This transformation has often been attributed to the modularization of electronic products. In this paper, we argue that the degree of modularity is an active choice variable for a firm. As a result, it is necessary to focus on the underlying fac-tors that drive both modularity and the organization of production. This provides insights into the transformation taking place in global electronics production, with vertical fragmentation, horizontal consolidation, and the growth of Asian electronics production.
    Keywords: Modularity, electronics, outsourcing, contract manufacturing, East Asia
    JEL: L14 L23 L63
    Date: 2004–08
  12. By: Schnabel, Claus (University of Erlangen-Nuremberg); Wagner, Joachim (University of Lueneburg and IZA Bonn)
    Abstract: Using representative individual-level data from the first round of the European Social Survey fielded in 2002/03, this paper provides an empirical analysis of unionization in 18 countries of the European Union. We show that union density varies considerably in Europe, ranging from 84 per cent in Denmark to 11 per cent in Portugal. Estimating identical models for each country, we find that individuals’ probability of union membership is significantly affected by their personal characteristics, their attitudes and the characteristics of their workplace, whereas social factors seem to play a minor role. The presence of a union at the workplace and employees’ attitudes concerning strong unions are the two variables with the most widespread effects on unionization.
    Keywords: union membership, union density, Europe
    JEL: J51
    Date: 2005–01
  13. By: F. Gerard Adams (Department of Economics, Northeastern University); Byron Gangnes (Department of Economics, University of Hawaii at Manoa); Yochanan Shachmurove (City University of New York)
    Abstract: This paper evaluates factors responsible for the competitiveness of China in the world economy and relative to its East Asian rivals. China has been highly successful in capturing world export markets. Chinese competitiveness is not just a matter of an undervalued exchange and extremely low labor costs. It reflects primarily the coincidence of favorable cost conditions with improvements in China’s ability to produce products that meet world market specifications. These improvements are closely related to foreign participation in China’s economy through foreign direct investment and joint venture enterprises.
    Keywords: China exports, comparative advantage, competitiveness, purchasing power parity, exchange rate, undervaluation, international comparisons, foreign direct investment, joint ventures
    JEL: D9 Q3 Q4
    Date: 2004–03

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