nep-bec New Economics Papers
on Business Economics
Issue of 2012‒01‒10
twenty papers chosen by
Christian Calmes
Universite du Quebec en Outaouais

  1. Are Forced Turnovers Good or Bad News? By Axel Kind; Alain Schlaepfer
  2. Director Characteristics and Firm Performance By Pascal Gantenbein; Christophe Volonté
  3. Firms and workers: who fails in times of crisis? By Priscila Ferreira; Mark Taylor
  4. Excess Worker Turnover and Fixed-Term Contracts: Causal Evidence in a Two-Tier System By Centeno, Mario; Novo, Alvaro A.
  5. Competition, Group Identity, and Social Networks in the Workplace: Evidence from a Chinese Textile Firm By Kato, Takao; Shu, Pian
  6. The Empirics of Firm Heterogeneity and International Trade By Bernard, Andrew B.; Jensen, J Bradford; Redding, Stephen J.; Schott, Peter K.
  7. Profitability in Cournot and Bertrand Mixed Markets under Endogenous Objectives By Scrimitore, Marcella
  8. Boards: Independent and Committed Directors? By Pascal Gantenbein; Christophe Volonté
  9. Trust-Based Working Time and Organizational Performance: Evidence from German Establishment-Level Panel Data By Michael Beckmann; Istvàn Hegedüs
  10. Firms' organizational modes with productivity heterogeneity, demand uncertainty and production capacity By Sun, Churen; Tian, Guoqiang
  11. Resource Allocation within Firms and Financial Market Dislocation: Evidence from Diversified Conglomerates By Gregor Matvos; Amit Seru
  12. Explaining TFP at firm level in Italy. Does location matter? By Aiello, Francesco; Pupo, Valeria; Ricotta, Fernand
  13. Management Practices Across Firms and Countries By Nicholas Bloom; Christos Genakos; Raffaella Sadun; John Van Reenen
  14. Top management’s snooping: Is sneaking over employees’ productivity and job commitment a wise approach? By Hasan, Dr. Syed Akif; Subhani, Dr. Muhammad Imtiaz
  15. Pricing behavior of firms when consumers have an Imperfect Recall By Hasan, Dr. Syed Akif; Subhani, Dr. Muhammad Imtiaz; Osman, Ms. Amber; Mehar, Ayub
  16. Exporting, R&D Investment and Firm Survival By Ratbek Dzhumashev; Vinod Mishra; Russell Smyth
  17. How sensitive are bargaining outcomes to changes in disagreement payoffs? By Nejat Anbarci; Nick Feltovich
  18. Optimality of Linearity with Collusion and Renegotiation By Mehmet Barlo; Ayca Ozdogan
  19. Is the firmfs history a determinant of wage? Evidence from matched employer-employee data in Japan By Kazufumi Yugami; Atsushi Morimoto
  20. Access Regulation and Welfare By Romain Lestage; David Flacher

  1. By: Axel Kind; Alain Schlaepfer (University of Basel)
    Keywords: CEO turnover; Corporate governance; Firm performance
    JEL: G14 G30 G34
    Date: 2011
  2. By: Pascal Gantenbein; Christophe Volonté (University of Basel)
    Keywords: Corporate governance: Board of directors; Director characteristics, Education and business experience
    JEL: G30 G34 G38
    Date: 2011
  3. By: Priscila Ferreira (NIMA, Universidade do Minho); Mark Taylor (ISER, University of Essex)
    Abstract: Using a panel of linked employer-employee data from Portugal, we follow the performance of firms and workers during the first decade of 2000s in terms of the risk of firm shutdown and of chances of workers’ entering unemployment. This allows us to identify the characteristics of unsuccessful firms and workers over this period and, of most interest, whether these characteristics changed as a consequence of the global crisis. In addition, and different from previous works, we (i) assess whether there is a differential effect to crisis depending on firm size, and (ii) relate the workers’ risk of unemployment to the hazard of firm shutdown. In the analyses of hazard of shutdown and risk of unemployment most of the effects of observed covariates remained unchanged through the business cycle. There is a differential response to crisis depending on firm size. A small firm’s risk of shutdown is 9 times the risk of a large firm. However, the chances of becoming unemployed are less than twice larger for a worker in a small firm. This suggests that large firms may be less likely to shutdown, but they are not a shield from unemployment.
    Keywords: firm survival, employment, crisis, LEED
    JEL: C33 J21 L25
    Date: 2011–12
  4. By: Centeno, Mario (Banco de Portugal); Novo, Alvaro A. (Banco de Portugal)
    Abstract: Portuguese firms engage in intense reallocation, most employers simultaneously hire and separate from workers, resulting in high excess worker turnover flows. These flows are constrained by the employment protection gap between open-ended and fixed-term contracts. We explore a reform that increased the employment protection of open-ended contracts and generated a quasi-experiment. The causal evidence points to an increase in the share and in the excess turnover of fixed-term contracts in treated firms. The excess turnover of open-ended contracts remained unchanged. This result is consistent with a high degree of substitution between open-ended and fixed-term contracts. At the firm level, we also show that excess turnover is quite heterogeneous and quantify its association with firm, match, and worker characteristics.
    Keywords: excess worker turnover, two-tier systems, quasi-experiment, fixed-term contracts
    JEL: J21 J23 J63
    Date: 2011–12
  5. By: Kato, Takao (Colgate University); Shu, Pian (MIT)
    Abstract: Using data on team assignment and weekly output for all weavers in an urban Chinese textile firm between April 2003 and March 2004, this paper studies a) how randomly assigned teammates affect an individual worker's behavior under a tournament-style incentive scheme, and b) how such effects interact with exogenously formed social networks in the manufacturing workplace. First, we find that a worker's performance improves when the average ability of her teammates increases. Second, we exploit the exogenous variations in workers' origins in the presence of the well-documented social divide between urban resident workers and rural migrant workers in large urban Chinese firms, and show that the coworker effects are only present if the teammates are of a different origin. In other words, workers do not act on pecuniary incentives to outperform teammates who are from the same social network. Our results point to the important role of group identities in overcoming self-interests and facilitating altruistic behavior.
    Keywords: coworker effects in the workplace, social networks, intergroup competition
    JEL: M5 J24 L2
    Date: 2011–12
  6. By: Bernard, Andrew B.; Jensen, J Bradford; Redding, Stephen J.; Schott, Peter K.
    Abstract: This paper reviews the empirical evidence on firm heterogeneity in international trade. A first wave of empirical findings from micro data on plants and firms proposed challenges for existing models of international trade and inspired the development of new theories emphasizing firm heterogeneity. Subsequent empirical research has examined additional predictions of these theories and explored other dimensions of the data not originally captured by them. These other dimensions include multi-product firms, offshoring, intra-firm trade and firm export market dynamics.
    Keywords: Exporting; Heterogeneous Firms; Importing; Productivity
    JEL: F10 F12 F14
    Date: 2011–11
  7. By: Scrimitore, Marcella
    Abstract: We examine both quantity and price competition between a number of profit-maximizing firms and a state-controlled enterprise (SCE). The objective function of the latter is strategically defined by a welfare-maximizing government which weighs the SCE’s profits relative to consumer surplus and private profits. Different motives drive the government‘s optimal behavior in the two competitive settings and lead all firms in oligopoly to gain higher profits in Cournot than in Bertrand. The profit ordering is reverted, and social welfare is enhanced, with respect to the purely-mixed market examined by Ghosh and Mitra (2010). In duopoly, aggregate profits are equivalent in Cournot and Bertrand.
    Keywords: Cournot; Bertrand; endogenous objectives; partial privatization
    JEL: L32 L13 D43
    Date: 2011–10–24
  8. By: Pascal Gantenbein; Christophe Volonté (University of Basel)
    Keywords: Corporate governance: Board of directors; Board independence; Board busyness; External commitments
    JEL: G30 G34 K22
    Date: 2011
  9. By: Michael Beckmann; Istvàn Hegedüs (University of Basel)
    Keywords: Trust-based working time, working time flexibility, firm performance
    JEL: J24 J81 M50
    Date: 2011
  10. By: Sun, Churen; Tian, Guoqiang
    Abstract: This paper investigates how firms' demand uncertainty with capacity constraints and their productivity heterogeneity affect their making-or-buying organizational choices in a general equilibrium framework with incomplete contracts. It shows that a final-good producer may adopt integrating a part of the production of its intermediate input in-house and outsource it at arm's length domestically or abroad simultaneously. Moreover, Five organizational modes, exiting the market, outsourcing in the North, outsourcing in the South, integrating and outsourcing in the North simultaneously, and integrating in the North and outsourcing in the South simultaneously, in turn occur with increase of firm-level productivity, as well as its demand uncertainty. Influences of uncertainty and productivity on prevalence of various organizational modes are also explored.
    Keywords: Uncertainty; organizational mode; productivity heterogeneity; incomplete contract; outsourcing; integration
    JEL: D23 F23 F12
    Date: 2011–06–22
  11. By: Gregor Matvos; Amit Seru
    Abstract: When external capital markets are stressed they may not reallocate resources between firms. We show that resource allocation within firms' internal capital markets provides an important force countervailing financial market dislocation. Using data on US conglomerates we empirically verify that firms shift resources between industries in response to shocks to the financial sector. We estimate a structural model of internal capital market to separately identify and quantify the forces driving the reallocation decision and how these forces interact with external capital market stress. The frictions in internal capital markets drive a large wedge between productivity and investment: the weaker (stronger) division obtains too much (little) capital, as though it is 12 (9) percent more (less) productive than it really is. The cost of accessing external capital funds quadruple during extreme financial market dislocations, making resource allocation within firms significantly cheaper. The estimated model allows us to simulate the propagation of the 2007/2008 financial market dislocation. The counterfactual out of sample simulated data is remarkably consistent with the actual data and shows that improved resource allocation in internal capital markets offset financial market stress during the recent financial crisis by 16% to 30% relative to firms with no internal capital markets.
    JEL: D92 E22 G01 G3 L21 L25
    Date: 2011–12
  12. By: Aiello, Francesco; Pupo, Valeria; Ricotta, Fernand
    Abstract: This study considers how firms’ internal variables and regional factors affect the total factor productivity of Italian manufacturing firms. Due to of the hierarchical structure of data in estimation, we employ a multilevel model. Results, which refer to 2006, show the importance of firm-specific determinants of TFP, but at the same time confirm the role of regional context in explaining the gap in TFP levels which exist between the South and the North of Italy. In this respect, we show that northern firms are localised in regions with adequate endowment of infrastructure, with efficient public administration and with high R&D intensity and, as a result of these factors, perform better than firms operating in less well endowed regions.
    Keywords: Manufacturing Firms; Total Factor Productivity; Italian Regional Divide; Multilevel Models
    JEL: R11 O14 L60
    Date: 2011–12–30
  13. By: Nicholas Bloom; Christos Genakos; Raffaella Sadun; John Van Reenen
    Abstract: For the last decade we have been using double-blind survey techniques and randomized sampling to construct management data on over 10,000 organizations across twenty countries. On average, we find that in manufacturing American, Japanese, and German firms are the best managed. Firms in developing countries, such as Brazil, China and India tend to be poorly managed. American retail firms and hospitals are also well managed by international standards, although American schools are worse managed than those in several other developed countries. We also find substantial variation in management practices across organizations in every country and every sector, mirroring the heterogeneity in the spread of performance in these sectors. One factor linked to this variation is ownership. Government, family, and founder owned firms are usually poorly managed, while multinational, dispersed shareholder and private-equity owned firms are typically well managed. Stronger product market competition and higher worker skills are associated with better management practices. Less regulated labor markets are associated with improvements in incentive management practices such as performance based promotion.
    Keywords: management, organization, and productivity
    JEL: L2 M2 O14 O32 O33
    Date: 2011–12
  14. By: Hasan, Dr. Syed Akif; Subhani, Dr. Muhammad Imtiaz
    Abstract: The management’s responsibility is to monitor the employee’s performance but when it becomes a desire of the management to snoop/spy the employees’ performance then this act has a direct influence on the employees and their motivations. The paper investigates the effects of top management’s spying/snooping in the organization on employees’ productivity and job commitment. For the purpose a sample of 3500 employees via self-administered survey technique were analyzed. Tobit Model (Censored regression) has been used to interrogate the effect of snooping/ spying on employee productivity and commitment. Tobit Model marked findings that the approach of top management to snoop/spy on the employees’ productivity and job commitment affects adversely on the employees. Policy makers should adopt informal ways to practice snooping as it causes stress, mental illness, de-motivation and especially when snooping is via other co-workers and employees, it creates major disruption and a rise to politicking in organization, which effect the proper streamlining of business operations across the departments.
    Keywords: Organizational spying/snooping; job commitment; employees’ productivity; stress
    JEL: O1 M12
    Date: 2012
  15. By: Hasan, Dr. Syed Akif; Subhani, Dr. Muhammad Imtiaz; Osman, Ms. Amber; Mehar, Ayub
    Abstract: Operating in markets which include the characteristics of both the perfect and imperfect competitions has never been so easy for a firm, while setting an acceptable price. Various firms show various pricing behavior to generate and maximize revenues. This paper is an attempt to encompass pricing behaviors of firms when consumers have imperfect recall for the past prices of the products, while giving a thought to ponder that which of the behaviors has an optimal rationale when a firm sets market price for a commodity. The findings concludes that firms set prices as similar as monopolist when the consumers of their products have imperfect recall for price they offered already in yore.
    Keywords: Imperfect recall; pricing behavior; monopolist; hotelling tradeoff
    JEL: M0 D11
    Date: 2012
  16. By: Ratbek Dzhumashev; Vinod Mishra; Russell Smyth
    Abstract: This paper examines the effect of exporting on firm survival for a panel of Indian IT firms. We show that exporting has competing effects on firm survival. On the one hand, exporting and investing in productivity are complementary activities, while on the other exporting activity is an additional source of uncertainty for the firm. We show that both effects influence survival, but operate at different points in time. Specifically, the hazard facing exporters is higher than non-exporters in the initial phase following entry into the export market, reflecting the fact that exporters are particularly vulnerable to shocks in the start-up phase. However, over time, exporters benefit more from productivity gains than non-exporters and the hazard facing exporters falls below that confronting non-exporters.
    Keywords: India, Firm survival, Information Technology, R&D, Exports
    JEL: L25 L86 C41
    Date: 2011–12
  17. By: Nejat Anbarci; Nick Feltovich
    Abstract: We use a human–subjects experiment to investigate how bargaining outcomes are affected by changes in bargainers’disagreement payoffs. Subjects bargain against changing opponents, with an asymmetric disagreement outcome that varies over plays of the game. Both bargaining parties are informed of both disagreement payoffs (and the cake size) prior to bargaining. We find that bargaining outcomes do vary with the disagreement outcome, but subjects severely under–react to changes in their own disagreement payoff and to changes in the opponent’s disagreement payoff, relative to the risk–neutral prediction. This effect is observed in a standard Nash demand game and a related unstructured bargaining game, and for two different cake sizes varying by a factor of four. We show theoretically that standard models of expected utility maximisation are unable to account for this under–responsiveness – even when risk aversion is introduced. We also show that other–regarding preferences can explain our main results.
    Keywords: Nash demand game, unstructured bargaining, disagreement, experiment, risk aversion, social preference, other–regarding behaviour, bargaining power.
    JEL: C78 C72 D81 D74
    Date: 2011–12
  18. By: Mehmet Barlo; Ayca Ozdogan
    Date: 2011–12
  19. By: Kazufumi Yugami (Graduate School of Economics, Kobe University); Atsushi Morimoto (Graduate School of Economics, Kobe University)
    JEL: J31 J41
    Date: 2011–12
  20. By: Romain Lestage (TEMEP, College of Engineering, Seoul National University); David Flacher (Centre d'Economie de l'universite Paris Nord (CEPN))
    Abstract: Abstract In a 2006 paper, Graeme Guthrie underlined that “[T]he impact of access price level on investment is not yet fully understood” and that “even less is known about the overall impact on welfare” (Guthrie 2006, p. 965). Although important progress has been made on the former issue, the latter remains largely underinvestigated. This paper contributes to addressing this question by analyzing the optimal access price in different investment games. Our main findings are as follows: 1. When only one firm can invest and when only service-based competition is feasible, the optimal access price is such as the flat part is as high as possible and the variable part equals the marginal cost. 2. The optimal variable part is lower when only service-based competition is possible than when several firms can invest, although there is too much duplication in the latter case. 3. When several firms can invest, the optimal access price is such as the flat part is as high as possible and the variable part is higher than the marginal cost. These results arise because the variable part determines both private incentives to invest and to duplicate and the extent to which investment and duplication are socially desirable.
    Keywords: Access regulation, infrastructure investment, welfare.
    JEL: L13 L43 L51
    Date: 2011–12

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