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on Business Economics |
| By: | Rui Castro (Department of Economics and CIREQ, Université de Montréal); Gian Luca Clementi (Department of Economics, Stern School of Business, New York University and RCEA); Yoonsoo Lee (Department of Economics, Sogang University and Federal Reserve Bank of Cleveland) |
| Abstract: | We estimate firm–level idiosyncratic risk in the U.S. manufacturing sector. Our proxy for risk is the volatility of the portion of growth in sales or TFP which is not explained by either industry– or economy–wide factors, or firm characteristics systematically associated with growth itself. We find that idiosyncratic risk accounts for about 90% of the overall uncertainty faced by firms. The extent of cross–sectoral variation in idiosyncratic risk is remarkable. Firms in the most volatile sector are subject to at least three times as much uncertainty as firms in the least volatile. Our evidence indicates that idiosyncratic risk is higher in industries where the extent of creative destruction is likely to be greater. |
| Keywords: | Schumpeterian Competition, Creative Destruction, Product Turnover, R&D Intensity, Investment–Specific Technological Change |
| JEL: | D24 L16 L60 O30 O31 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:28_10&r=bec |
| By: | Gian Luca Clementi (Department of Economics, Stern School of Business, New York University and RCEA); Dino Palazzo (Department of Finance and Economics, Boston University School of Management) |
| Abstract: | How important are firm entry and exit in shaping aggregate dynamics? We address this question by characterizing the equilibrium allocation in Hopenhayn (1992)’s model of equilibrium industry dynamics, amended to allow for investment in physical capital and aggregate fluctuations. We find that entry and exit propagate the effects of aggregate shocks. In turn, this results in greater persistence and unconditional variation of aggregate time-series. In the aftermath of a positive productivity shock, the number of entrants increases. The new firms are smaller and less productive than the incumbents, as in the data. As the common productivity component reverts to its unconditional mean, the new entrants that survive become progressively more productive, keeping aggregate efficiency higher than in a scenario without entry or exit. We also find that both the mean and variance of the cross-sectional distribution of firm–level productivity are counter–cyclical, in spite of the assumption that innovations to firm–level productivity are i.i.d. and orthogonal to aggregate shocks. This happens because of selection: the idiosyncratic productivity of the marginal entrant is lower in expansion than during recessions. Since idiosyncratic productivity is mean–reverting, mean and variance of the distribution of productivity growth are pro–cyclical. |
| Keywords: | Selection, Propagation, Persistence, Survival, Reallocation |
| JEL: | D21 D92 E32 L11 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:27_10&r=bec |
| By: | Ali Dib |
| Abstract: | The author develops a dynamic stochastic general-equilibrium model with an active banking sector, a financial accelerator, and financial frictions in the interbank and bank capital markets. He investigates the importance of banking sector frictions on business cycle fluctuations and assesses the role of a regulatory capital requirement in propagating the effects of shocks in the real economy. Bank capital is introduced to satisfy the regulatory capital requirement, and serves as collateral for borrowing in the interbank market. Financial frictions are introduced by assuming asymmetric information between lenders and borrowers that creates moral hazard and adverse selection problems in the interbank and bank capital markets, respectively. Highly leveraged banks are vulnerable and therefore pay higher costs when raising funds. The author finds that financial frictions in the interbank and bank capital markets amplify and propagate the effects of shocks; however, the capital requirement attenuates the real impacts of aggregate shocks (including financial shocks), reduces macroeconomic volatilities, and stabilizes the economy. |
| Keywords: | Economic models; Business fluctuations and cycles; Financial markets; Financial stability |
| JEL: | E32 E44 G1 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:10-26&r=bec |
| By: | Valérie Sabatier (GAEL - Economie Appliquée de Grenoble - INRA : UR1215 - Université Pierre Mendès-France - Grenoble II, 3PX Therapeutics - 3PX Therapeutics, MTS - Management Technologique et Strategique - Grenoble Ecole de Management); Vincent Mangematin (MTS - Management Technologique et Strategique - Grenoble Ecole de Management); Tristan Rouselle (3PX Therapeutics - 3PX Therapeutics) |
| Abstract: | At the crossroad of firm's core competencies and of the anticipations of consumers' needs, the business model approach complements corporate and business strategy approaches. Firms combine several business models simultaneously to deliver value to different markets, building a portfolio of business model. For managers, business model and business model portfolio are particularly useful to address customer's needs and organisational capabilities of the firm. They also emphasise how the initial core competency of the firm can be extended or redeployed to increase the rent. Business model portfolio describes the firm's strategy to balance time-to-market, revenue stream, risk and interdependencies. It conceptualises firm diversification within the same industry to generate and capture rents. They finally describe two generic dimensions: core competence extension to enlarge the market and to address additional customers and core competence redeployment to serve similar market with the same core competence. |
| Keywords: | Biopharmaceutical; portfolio; corporate strategy; business strategy; core competence; coherence; value chain |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-00430782_v1&r=bec |
| By: | Alberto Behar |
| Abstract: | This paper constructs country-level aggregates of trade facilitation measures from firm-level responses in the Enterprise Surveys and compares them with the Doind Business indicators, the Logistics Performance Index and the Enabling Trade Index. Correlations between the data sources are low even for very specific and simlar questions. We also us the Enterprise Surveys to distinguisj between within-country inter-firm varaiation and between-country variation, finding that the latter acccounts for only a quarter of the total. for the purposes of identifying where reform is needed and estimating the relationship between trade facilitation and exports, these findings rasie the issue of which form of variation is more informative and which data source is more reliable. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:csa:wpaper:2010-29&r=bec |
| By: | Rob Simmons; Babatunde Buraimo; Alex Bryson |
| Abstract: | We establish the effects of salaries on worker performance by exploiting a natural experiment in which some workers in a particular occupation (football referees) switch from short-term contracts to salaried contracts. Worker performance improves among those who move onto salaried contracts relative to those who do not. The finding is robust to the introduction of worker fixed effects indicating that it is not driven by better workers being awarded salary contracts. Nor is it sensitive to workers sorting into or out of the profession. Improved performance could arise from the additional effort workers exert due to career concerns, the higher income associated with career contracts (an efficiency wage effect) or improvements in worker quality arising from off-the-job training which accompanies the salaried contracts. |
| Keywords: | incentives; salaries; productivity; sports |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:lan:wpaper:006863&r=bec |
| By: | Marcelo Delajara |
| Abstract: | Using various statistical measures we estimate the degree of comovement and cyclical synchronization of formal employment across Mexican states. As a measure of formal employment we use the number of workers with permanent contracts registered at the Instituto Mexicano del Seguro Social in each state between July 1997 and April 2009. We find that Mexican states are highly heterogeneous with respect to the degree of employment comovement and the association between the state and national employment. Only in 11 of the 32 states we find that fluctuations in state employment are highly synchronized between them and with national employment. These states are located in the northern border with the United States, in the center west and in the center of the country. Additionally, we find evidence of employment comovement, albeit much weaker, in 4 states located in the vicinity of Mexico City. In the rest of the states, employment fluctuations are unrelated to national employment or other states' employment fluctuations. |
| Keywords: | Employment, cycles, comovement, states, regions, Mexico. |
| JEL: | E32 R11 R23 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:bdm:wpaper:2010-13&r=bec |
| By: | Pascal Billand (CREUSET, Jean Monnet University); Christophe Bravard (CREUSET, Jean Monnet University); Subhadip Chakrabarti (School of Management and Economics, Queen’s University Belfast); Sudipta Sarangi (DIW Berlin and Department of Economics, Louisiana State University) |
| Abstract: | We consider a multimarket framework where a set of firms compete on two interrelated oligopolistic markets. Prior to competing in these markets, firms can spy on others in order to increase the quality of their product. We characterize the equilibrium espionage networks and networks that maximize social welfare under the most interesting scenario of diseconomies of scope. We find that in some situations firms may refrain from spying even if it is costless. Moreover, even though spying leads to increased product quality, there exist situations where it is detrimental to both consumer welfare and social welfare. |
| Keywords: | Oligopoly, Multimarket, Networks |
| JEL: | C70 L13 L20 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.117&r=bec |
| By: | Benoit Dostie |
| Abstract: | In this paper, we estimate returns to classroom and on-the-job firm sponsored training in terms of value-added per worker using longitudinal linked employee-employer Canadian data from 1999 to 2006. We estimate a standard production function controlling for endogenous training decisions because of perceived net benefits and time-varying market conditions using dynamic panel GMM methods. We find that employees who undertook classroom training are 11 percent more productive than otherwise similar employees. We show that returns to on-the-job training are on average lower (3:4 percent). We provide evidence that these lower returns are due to on-the-job training being more closely related to turnover and more geared toward subjects that are less productivity-enhancing. <P>Nous estimons dans cet article les rendements de la formation parrainée par l'employeur, en classe et en cours d'emploi, en termes de valeur ajoutée par travailleur en utilisant les données de l'Enquête sur le milieu de travail et les employés (EMTE) de Statistique Canada pour la période 1999-2006. Nous estimons une fonction de production où nous tenons compte de l'endogénéité des décisions de formation des entreprises due aux bénéfices escomptés et aux conditions de marché en utilisant une version dynamique de la méthode des moments généralisés. Nous trouvons que les employés ayant reçu de la formation en classe sont 11 % plus productif. Par contre, nous trouvons que les rendements de la formation en cours d'emploi sont inférieurs (3,4 %). Nous montrons que ces rendements inférieurs sont expliqués par le fait que la formation en cours d'emploi est reliée plus étroitement au roulement de la main d'oeuvre et que les sujets qui y sont traités ont moins d'impacts sur la productivité. |
| Keywords: | Productivity, On-the-job training, Classroom training, Turnover, Linked employer-employee data, Productivité, formation en cours d'emploi, formation en classe, roulement de la main-d'oeuvre, données employeur-employé liées |
| Date: | 2010–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2010s-44&r=bec |
| By: | Dostie, Benoit (HEC Montreal) |
| Abstract: | In this paper, we estimate returns to classroom and on-the-job firm-sponsored training in terms of value-added per worker using longitudinal linked employee-employer Canadian data from 1999 to 2006. We estimate a standard production function controlling for endogenous training decisions because of perceived net benefits and time-varying market conditions using dynamic panel GMM methods. We find that employees who undertook classroom training are 11 percent more productive than otherwise similar employees. We show that returns to on-the-job training are on average lower (3.4 percent). We provide evidence that these lower returns are due to on-the-job training being more closely related to turnover and more geared toward subjects that are less productivity-enhancing. |
| Keywords: | productivity, on-the-job training, classroom training, turnover, subjects of training |
| JEL: | C23 D24 J31 J63 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5258&r=bec |
| By: | Anginer, Deniz; Warburton, A. Joseph |
| Abstract: | Did the U.S. government's intervention in the Chrysler reorganization overturn bankruptcy law? Critics argue that the government-sponsored reorganization impermissibly elevated claims of the auto union over those of Chrysler's other creditors. If the critics are correct, businesses might suffer an increase in their cost of debt because creditors will perceive a new risk, that organized labor might leap-frog them in bankruptcy. This paper examines the financial market wherethis effect would be most detectible, the market for bonds of highly unionized companies. The authors find no evidence of a negative reaction to the Chrysler bailout by bondholders of unionized firms. They thus reject the notion that investors perceived a distortion of bankruptcy priorities. To the contrary, bondholders of unionized firms reacted positively to the Chrysler bailout. This evidence suggests that bondholders interpreted the Chrysler bailout as a signal that the government will stand behind unionized firms. The results are consistent with the notion that too-big-to-fail government policies generate moral hazard in the credit markets. |
| Keywords: | Debt Markets,Bankruptcy and Resolution of Financial Distress,Emerging Markets,Deposit Insurance,Access to Finance |
| Date: | 2010–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5462&r=bec |