nep-bec New Economics Papers
on Business Economics
Issue of 2007‒05‒04
eleven papers chosen by
Christian Calmes
University of Quebec in Ottawa

  1. Maximizing stakeholders' interests: An empirical analysis of the stakeholder approach to corporate governance By Ayuso, Silvia; Rodriguez, Miguel A.; Garcia, Roberto; Ariño, Miguel A.
  2. Are external technology sourcing strategies substitutes or complements? The case of embodied versus disembodied technology acquisition By Cassiman, Bruno; Veugelers, Reinhilde
  3. Offshoring as a Survival Strategy in Globalizing Industries: New Evidence from Belgian Manufacturing By Coucke, K.; Sleuwaegen, L.
  4. The Impact of Managerial Quality on Organizational Performance: Evidence from German Soccer By Bernd Frick; Robert Simmons
  5. Bank Risk-Taking and Competition Revisited: New Theory and New Evidence By Gianni De Nicoló; John H. Boyd; Abu M. Jalal
  6. What do we really know about when technological innovation improves performance (and when it does not)? By Adegbesan, Tunji; Ricart, Joan E.
  7. Corporate Governance Quality: Trends and Real Effects By Gianni De Nicoló; Luc Laeven; Kenichi Ueda
  8. Earnings Instability and Tenure By Lorenzo Cappellari; Marco Leonardi
  9. Employment Outcomes and the Interaction Between Product and Labor Market Deregulation: Are They Substitutes or Complements? By Guiseppe Fiori; Giuseppe Nicoletti; Stefano Scarpetta; Fabio Schiantarelli
  10. Cooperative Production and Efficiency By Carmen Beviá; Luis C. Corchón
  11. Mise en oeuvre du droit du travail : licenciement individuel et incitations. By Yannick Gabuthy; Eve-Angéline Lambert

  1. By: Ayuso, Silvia (IESE Business School); Rodriguez, Miguel A. (IESE Business School); Garcia, Roberto (IESE Business School); Ariño, Miguel A. (IESE Business School)
    Abstract: The purpose of this paper is to build on the emerging stakeholder model of corporate governance by analyzing the CSR function at board level, board diversity, and stakeholder engagement, and how it relates to financial performance. Based on an empirical study of an international sample of large companies, we find board responsibility for CSR to be a key factor in promoting engagement with primary and secondary stakeholders of the firm. Depending on the legal tradition of the country in which the company is based, we find evidence that board diversity and stakeholder engagement are positively correlated with firm financial performance.
    Keywords: Corporate governance; corporate social responsibility; board diversity; stakeholder engagement; firm performance;
    Date: 2007–01–19
  2. By: Cassiman, Bruno (IESE Business School); Veugelers, Reinhilde (Katholieke Universiteit Leuven)
    Abstract: This paper analyzes the choice between different external technology sourcing activities of a firm. On the one hand, the firm can acquire new technology which is embodied in personnel. On the other hand, the firm can obtain new technology disembodied through a licensing agreement or by outsourcing the technology development from an R&D contractor. Building on Cassiman and Veugelers (2006), we test whether embodied and disembodied technology acquisitions are complementary activities or rather behave as substitute technology acquisition alternatives. We find that while internal and external technology acquisition are complementary innovation activities, the actual choice of external technology sourcing between embodied or disembodied modes is substitutive for smaller firms. The evidence for larger firms suggests that different external technology sourcing activities are complementary, but in this case the results are suggestive although not strongly significant.
    Keywords: Embodied & disembodied technology acquisition; complementarity; substitutability;
    Date: 2007–01–23
  3. By: Coucke, K.; Sleuwaegen, L.
    Abstract: This paper analyzes the impact of globalization on the exit behavior of manufacturing firms in one of the world’s most open economies: Belgium. We find that imports from low-wage countries exert a strong competitive effect that lowers a firm’s chances of survival. This competitive effect is found to arise mainly in industries where intra-industry trade, an indicator of product differentiation, is relatively low. As an offensive strategy to cope with the rising competitive pressure from imports, we find that firms exploiting opportunities afforded by globalization, in particular the off-shoring of activities, are able to improve their chances of survival. Making a distinction between domestic firms and subsidiaries of multinational firms, we also find that domestic firms face a higher risk of exit when multinational firms compete in their relevant input and output markets. Finally, we show that subsidiaries of multinational firms are better adapted to cope with globalization forces, and we find them to be less sensitive to domestic market conditions in the host country.
    Keywords: Exit, Off-shoring, Sourcing, Globalization
    JEL: F1 F23 L2
    Date: 2007–04–23
  4. By: Bernd Frick (Witten/Herdecke University); Robert Simmons (Lancaster University)
    Abstract: Although a considerable literature exists on determinants of managerial compensation, much of it focussing on the role of incentives, there is much less known about the im-pact of managerial remuneration and quality upon attainment of organizational goals. In this paper we use a novel panel data set from the German premier soccer league (Bundesliga) as a case to show how variations in managerial compensation impact posi-tively upon organizational (team) success. This positive impact is revealed using sto-chastic frontier production function estimation. Given a particular amount of spending on players relative to the rest of the Bundesliga, a team that hires a better quality coach can expect to achieve a higher points score by reducing technical inefficiency. However, our results also suggest that the market for head coaches may be allocatively inefficient in that coaches are paid below their marginal revenue products.
    Keywords: head coaches, soccer, efficiency, stochastic frontier analysis
    JEL: J44 L83 M50
    Date: 2007–04
  5. By: Gianni De Nicoló; John H. Boyd; Abu M. Jalal
    Abstract: This paper studies two new models in which banks face a non-trivial asset allocation decision. The first model (CVH) predicts a negative relationship between banks' risk of failure and concentration, indicating a trade-off between competition and stability. The second model (BDN) predicts a positive relationship, suggesting no such trade-off exists. Both models can predict a negative relationship between concentration and bank loan-to-asset ratios, and a nonmonotonic relationship between bank concentration and profitability. We explore these predictions empirically using a cross-sectional sample of about 2,500 U.S. banks in 2003 and a panel data set of about 2,600 banks in 134 nonindustrialized countries for 1993-2004. In both these samples, we find that banks' probability of failure is positively and significantly related to concentration, loan-to-asset ratios are negatively and significantly related to concentration, and bank profits are positively and significantly related to concentration. Thus, the risk predictions of the CVH model are rejected, those of the BDN model are not, there is no trade-off between bank competition and stability, and bank competition fosters the willingness of banks to lend.
    Keywords: Bank competition , concentration , risk , asset allocations , Bank soundness , Competition , Profits , Asset management , Resource allocation , Risk management , Economic models ,
    Date: 2007–01–08
  6. By: Adegbesan, Tunji (IESE Business School); Ricart, Joan E. (IESE Business School)
    Abstract: Most approaches to innovation bear the implicit assumption that increased innovativeness leads to improved organizational performance. Thus, more attention has been focused on innovativeness than on innovation performance; on novelty than on value. However, recent empirical evidence calls into question the unqualified optimism surrounding innovation, and leads us to ask what we really know about when technological innovation improves performance. In this paper, we seek to make a contribution by presenting the results of an exhaustive review of extant knowledge on the outcomes of technological innovation. Our synthesis of the literature allows us to relate in one parsimonious model the drivers and moderators of the antecedents, technical outcomes, and performance outcomes of technological innovation and technological change. We also make sense of the proliferation of terms, and consequent terminological ambiguity, which characterizes a lot of work on technological innovation. Finally, in the light of the model presented and recent developments in work on firm capabilities, we indicate possible avenues for further development of this critical area of research.
    Keywords: Technological innovation; organizational performance; innovation and innovativeness;
    Date: 2007–01–15
  7. By: Gianni De Nicoló; Luc Laeven; Kenichi Ueda
    Abstract: This paper constructs a composite index of corporate governance quality, documents its evolution from 1994 through 2003 in selected emerging and developed economies, and assesses its impact on aggregate and corporate growth and productivity. Our investigation yields three main findings. First, corporate governance quality in most countries has overall improved, although to varying degrees and with a few notable exceptions. Second, the data exhibit cross-country convergence in corporate governance quality with countries that score poorly initially catching up with countries with high corporate governance scores. Third, the impact of improvements in corporate governance quality on traditional measures of real economic activity-GDP growth, productivity growth, and the ratio of investment to GDP- is positive, significant, and quantitatively relevant, and the growth effect is particularly pronounced for industries that are most dependent on external finance.
    Keywords: Corporate governance , disclosure , transparency , economic growth , productivity , Governance , Transparency , Economic growth , Gross domestic product , Productivity , Investment ,
    Date: 2007–01–08
  8. By: Lorenzo Cappellari (Department of Economics, Università Cattolica di Milano); Marco Leonardi (University of Milan)
    Abstract: This paper develops a tractable empirical approach to estimate the effect of on-the-job tenure on the permanent and the transitory variance of earnings. The model is also used to evaluate earnings instability associated with fixed-term contracts (short-tenure contracts) in Italy. Our results indicate that each year of tenure on the job reduces earnings instability on average by 15%. Workers on a fixed-term contract on average have an earnings instability 10% higher than workers on a permanent contract. Workers who spend their entire working life on fixed-term contracts can expect an earnings instability twice as high.
    Date: 2007–02
  9. By: Guiseppe Fiori (Boston College); Giuseppe Nicoletti (OECD); Stefano Scarpetta (OECD; IZA); Fabio Schiantarelli (Boston College; IZA)
    Abstract: This paper provides a systematic empirical investigation of the effect of product market liberalization on employment when there are interactions between policies and institutions in product and labor markets. Using panel data for OECD countries over the period 1980-2002, we present evidence that product market deregulation is more effective at the margin when labor market regulation is high. Moreover, there is evidence in our sample that product market deregulation promotes labor market deregulation. We show that these results are mostly consistent with the basic predictions of a standard bargaining model (e.g. Blanchard and Giavazzi (2003)), once one allows for a full specification of the fall back position of the unions.
    Keywords: Employment, Competition, Deregulation, Liberalization, Unions
    JEL: J23 J50 L50
    Date: 2007–04–23
  10. By: Carmen Beviá; Luis C. Corchón
    Abstract: We characterize the sharing rule for which a contribution mechanism achieves efficiency in a cooperative production setting when agents are heterogeneous. The sharing rule bears no resemblance to those considered by the previous literature. We also show for a large class of sharing rules that if Nash equilibrium yields efficient allocations, the production function displays constant returns to scale, a case in which cooperation in production is useless.
    Keywords: Cooperative Production, sharing rules, efficiency
    JEL: D29 D6 D78
    Date: 2007–04–23
  11. By: Yannick Gabuthy; Eve-Angéline Lambert
    Abstract: La législation sur la protection de l’emploi a fait l’objet de nombreuses analyses concernant son impact macroéconomique sur les performances du marché du travail. Cependant, une littérature plus récente s’intéresse aux effets de la protection de l’emploi, relative notamment au licenciement individuel, sur le comportement des agents économiques impliqués dans la relation de travail. Ces analyses montrent que les règles juridiques encadrant la rupture de cette relation ne sont pas neutres. En effet, elles influencent non seulement le comportement des protagonistes lors de cette éventuelle rupture (que ce soit dans le choix du mode de séparation ou dans la négociation des indemnités de licenciement qui en découle) mais également au sein de la relation de travail (notamment en termes d’incitations `a l’investissement spécifique). A cet égard, toute politique législative devrait tenir compte de cette capacité réactive des agents économiques afin de structurer efficacement les règles juridiques relatives au licenciement individuel.
    JEL: A12 K31 K4
    Date: 2007

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