nep-bec New Economics Papers
on Business Economics
Issue of 2012‒05‒22
nineteen papers chosen by
Christian Calmes
Universite du Quebec en Outaouais

  1. Export intensity and firm performance for family brewers By Houthoofd, Noël; Hendrickx, Jef
  2. Inventory Investment and the Business Cycle : The usual Suspect By Frédérique Bec; Mélika Ben Salem
  3. The iPhone Goes Downstream: Mandatory Universal Distribution∗ By Karp, Larry; Perloff, Jeffrey
  4. Outsourcing with Heterogeneous Firms By Arghya Ghosh; Alberto Motta
  5. Corporate geography in multi-plant firms By Rita Cappariello; Stefano Federico; Roberta Zizza
  6. Promotion without Commitment: Signaling, Time Inconsistency and Decentralization of the Firm By Junichiro Ishida
  7. Temporary Employment, Job Flows and Productivity: A Tale of Two Reforms By Cappellari, Lorenzo; Dell'Aringa, Carlo; Leonardi, Marco
  8. Leaving the Door Ajar : Nonlinear Pricing by a Dominant Firm By Philippe Choné; Laurent Linnemer
  9. The response of capital goods shipments to demand over the business cycle By Jeremy J. Nalewaik; Eugenio P. Pinto
  10. Sales, Inventories, and Real Interest Rates: A Century of Stylized Facts By Luca Benati; Thomas A Lubik
  11. Do Firm-Bank ``Odd Couples'' Exacerbate Credit Rationing? By Giovanni Ferri; Pierluigi Murro
  12. How exporters respond to antidumping investigations? By Lu, Yi; Tao, Zhigang; Zhang, Yan
  13. Short Hours, Long Hours: Hour Levels and Trends in the Retail Industry in the United States, Canada, and Mexico By Francoise Carre; Chris Tilly
  14. The Rise and Fall of Unions in the U.S. By Emin M. Dinlersoz; Jeremy Greenwood
  15. Does export participation affect wages and employment quality? the case of Vietnamese SMEs By Vu , Van Huong
  16. Has the U.S. Finance Industry Become Less Efficient? On the Theory and Measurement of Financial Intermediation By Thomas Philippon
  17. Prescriptions for network strategy: Does evidence of network effects in cross-section support them? By Baum, Joel A.C.; Cowan, Robin; Jonard, Nicolas
  18. How are firms affected by the crisis and how do they react? By Ioana Neamtu; Niels Westergård-Nielsen
  19. Union Decline in Britain: Is Chauvinism Also to Blame? By Haile, Getinet Astatike

  1. By: Houthoofd, Noël (Hogeschool-Universiteit Brussel (HUB)); Hendrickx, Jef (Hogeschool-Universiteit Brussel (HUB))
    Abstract: Purpose of the paper. This paper investigates whether product line breadth, innovation and company size can be linked with export performance. The focus is on the relationship between export performance and firm performance, especially for family brewers in Belgium. Research method. A questionnaire was sent to most family brewers in Belgium at the end of 2009 and the beginning of 2010. 22 brewers participated in the survey. The case study of Duvel Moortgat relies heavily on press releases and annual accounts of the firm. Moderated regressions were used to test hypotheses. The case study is exemplary for the issues investigated. Findings. Product line breadth, innovation and firm size are not significantly correlated with export intensity. Export intensity in turn is also not significantly correlated with profits. But export intensity is beneficial for the growth of Belgian breweries. Product line breadth and innovation moderate the export intensity – firm performance relationship. The positive relationship between export intensity and firm performance is higher for high levels of innovation, while innovation in itself harms firm growth. Product line breadth in itself helps firm growth. However, the positive effect of export intensity on firm performance is higher for lower levels of product line breadth. The case of Duvel- Moortgat indicates that an equilibrated growth of sales and profits is possible and that internationalization and exports are an important part of the strategy. Practical implications. The paper shows that a more intensive export orientation is beneficial for the growth of the brewery. The case study of Duvel-Moortgat illustrates that there is no trade off between internal growth and external growth, and that firm performance can keep pace with internationalization.
    Keywords: Export performance, export intensity, growth, firm performance, beer brewing industry, Duvel- Moortgat
    Date: 2012–05
  2. By: Frédérique Bec (CREST, THEMA); Mélika Ben Salem (CEE, PSE, Université Paris Est)
    Keywords: inventory investment, threshold models, bounce-back effects, asymmetric business cycles
    JEL: E32 C22
    Date: 2012–04
  3. By: Karp, Larry; Perloff, Jeffrey
    Abstract: Apple’s original decision to market iPhones using a single downstream vendor prompted calls for mandatory universal distribution (MUD), whereby all downstream vendors would sell the iPhone under the same contract terms. The upstream monopoly may want eitherone or more downstream vendors, and, in either case, consumer welfare may be higher with either one or more firms. If the income elasticity of demand for the new good is greater than the income elasticity of the existing generic good, the MUD requirements leads to a higherequilibrium price for both the new good and the generic, and therefore lowers consumer welfare.
    Keywords: Economics, vertical restrictions, mandatory universal distribution, new product oligopoly
    Date: 2011–12–15
  4. By: Arghya Ghosh (School of Economics, The University of New South Wales); Alberto Motta (School of Economics, The University of New South Wales)
    Abstract: We look at imperfectly competitive markets where some consumers might be budget-constrained. We find that the equilibrium price under budget constrained demand (say, pB ) is often higher than the equilibrium price under standard demand (say, pA ). The relationship between pB and pA depends on the elasticity of the standard demand (at pA ), technology, and market structure. Lack of competition and inefficient technology make pB > pA more likely.
    Keywords: Budget-constrained; elasticity; oligopoly pricing
    JEL: D43 L13
    Date: 2011–05
  5. By: Rita Cappariello (Bank of Italy); Stefano Federico (Bank of Italy); Roberta Zizza (Bank of Italy)
    Abstract: This paper focuses on how multi-plant firms allocate their workforce and investments between headquarters or plants located in or close to the headquarters area (HQ plants) and those located in the same country but farther away from the headquarters area (non-HQ plants). Using survey data on Italian industrial multi-plant firms for the last decade, we find that, for the same firm, employment and investments grow significantly less in non-HQ plants compared to HQ plants. We discuss several possible interpretations of these "corporate geography" patterns.
    Keywords: multi-plant firms, firm headquarters, employment, investment, Italy
    JEL: R30 L20 F23
    Date: 2012–04
  6. By: Junichiro Ishida
    Abstract: This paper explores the consequences and implications of the "dual role of promotion" in an environment where a firm must simultaneously achieve two distinct goals -- assignment and incentive provision -- via the strategic use of promotions. We argue that the efficient promotion rule is generally not implementable, as it necessarily entails time-inconsistent objectives: the firm is always tempted ex post to promote the worker with the highest upside potential rather than the one with the highest output. This ex post bias towards the assignment role of promotion leads to inefficient task choices where too many workers are induced to work on the difficult task to signal their productivities. The framework identifies the costs and benefits of decentralization, in relation to factors such as the levels of human and social capital, the degree of market competition, firm size, and distance to the technology frontier, and provides predictions that are in line with recent empirical evidence.
    Date: 2012–05
  7. By: Cappellari, Lorenzo (Università Cattolica del Sacro Cuore); Dell'Aringa, Carlo (Università Cattolica del Sacro Cuore); Leonardi, Marco (University of Milan)
    Abstract: We investigate the effects of two reforms of temporary employment using panel data on Italian firms. We exploit variation in their implementation across regions and sectors for identification. Our results show that the reform of apprenticeship contracts increased job turnover and induced the substitution of external staff with firms' apprentices, with an overall productivity-enhancing effect. The reform of fixed-term contracts instead did not produce the intended results: it induced a substitution of temporary employees in favour of external staff and reduced capital intensity, generating productivity losses. We estimate substitution elasticities across various types of temporary contracts that are consistent with this interpretation.
    Keywords: employment contracts, productivity, institutional changes
    JEL: J24 J41
    Date: 2012–04
  8. By: Philippe Choné (CREST); Laurent Linnemer (CREST)
    Date: 2011–05
  9. By: Jeremy J. Nalewaik; Eugenio P. Pinto
    Abstract: This paper studies the behavior of producers of capital goods, examining how they set shipments in response to fluctuations in new orders. The paper establishes a stylized fact: the response of shipments to orders is more pronounced when the level of new orders is low relative to the level of shipments, usually after orders plunge in recessions. This cyclical change in firm behavior is quantitatively important, accounting for a large portion of the steep decline in equipment investment in the 2001 and 2007--9 recessions. We examine economic interpretations of this stylized fact using a model where firms smooth production with a target delivery lag for new orders. Heightened persistence in orders growth may explain part of the greater responsiveness of shipments to orders, as may increases in firms' target buffer stocks of unfilled orders relative to shipments.
    Date: 2012
  10. By: Luca Benati; Thomas A Lubik
    Abstract: We use Bayesian time-varying parameters structural VARs with stochastic volatility to investigate changes in both the reduced-form and the structural correlations between business inventories and either sales growth or the real interest rate in the United States during both the interwar and the post-WWII periods. We identify four structural shocks by combining a single long-run restriction to identify a permanent output shock as in Blanchard and Quah (1989), with three sign restrictions to identify demand- and supply-side transitory shocks. We produce several new stylized facts which should inform the development of new models of inventories. In particular, we show that (i ) during both the interwar and the post-WWII periods, the structural correlation between inventories and the real interest rate conditional on identied interest rate shocks is systematically positive; (ii ) the reduced-form correlation between the two series is positive during the post-WWII period, but in line with the predictions of theory it is robustly negative during the interwar era; and (iii ) during the interwar era, the correlations between inventories and either of the two other series exhibits a remarkably strong co-movement with output at the business-cycle frequencies.
    Date: 2012–05
  11. By: Giovanni Ferri (University of Bari); Pierluigi Murro (LUISS University)
    Abstract: This paper tests the impact of an imperfect bank-firm type match on firms' financial constraints using a dataset of about 4,500 Italian manufacturing firms. We start considering an optimal matching of opaque (transparent) borrowing firms with relational (transactional) lending main banks. Next we contemplate the possibility that firm-bank "odd couples" materialize where opaque (transparent) firms end up matched with transactional (relational) main banks. Our results show that more than 25% of the firms falls into an "odd couple". Moreover, we find that the probability of rationing is larger when firms and banks match in "odd couples". We conjecture the "odd couples" emerge either since the bank's lending technology is not perfectly observable to the firm or because riskier firms - even though opaque - strategically select transactional banks in the hope of being classified as lower risks.
    Keywords: Bank-firm Relationship, Asymmetric Information, Credit Rationing.
    JEL: G21 D82 G30
    Date: 2012
  12. By: Lu, Yi; Tao, Zhigang; Zhang, Yan
    Abstract: Using China Customs data that cover monthly transactions of all Chinese exporters, we investigate how Chinese exporters respond to U.S. antidumping investigations during the 2000-2006 period. Our difference-in-differences analysis uncovers a number of findings: (1) the substantial trade-dampening effect at the product level operates mostly at the extensive margin (i.e., a decrease in the number of exporters) rather than the intensive margin (i.e., a decrease in the export volume per exporter); (2) direct exporters are more likely to exit the U.S. market than trade intermediaries upon both the affirmative preliminary and final ITC determinations; (3) multi-product direct exporters are more likely to exit the U.S. market than single-product direct exporters upon the affirmative preliminary ITC determination, but the opposite holds upon the affirmative final ITC determination; and (4) little price adjustment to antidumping investigations are found at either the product level or firm-product level. We then provide a coherent explanation to the aforementioned findings based on recent developments in trade theories.
    Keywords: Antidumping investigations; Difference-in-differences estimation; Extensive and intensive margins; Trade intermediaries; Single- versus multi-product exporters
    JEL: D21 L25 F13 F14
    Date: 2012–05
  13. By: Francoise Carre (University of Massachusetts-Boston); Chris Tilly (UCLA)
    Abstract: In settings where most workers have full-time schedules, hourly wages are appropriate primary indicators of job quality and worker outcomes. However, in sectors where full-time schedules do not dominate— primarily service-producing activities—total hours matter, in addition to hourly wages, for job quality and worker outcomes. In this paper we employ a sector-focused, comparative framework to further examine hours levels—measured as average weekly hours—and trends in Canada, the United States, and Mexico. We analyze the retail sector, which is of interest because of its high rate of part-time employment in the U.S. Based on our fieldwork in the United States and Mexico and qualitative literature on Canadian retail work, we argue that the combination of business strategies and very different institutional constraints will lead U.S. retailers to a greater extent and Canadian retailers to a lesser extent to shorten hours and expand part-time jobs, whereas in Mexico it will lead retailers to lengthen hours. We apply this argument to predictions about differences in levels and trends. Drawing on standard public data sources from the three countries, we compare means and run time series regressions to estimate trends net of cyclical effects. Results broadly support our predictions, especially the distinction between the United States and Canada on the one hand and Mexico on the other. We provide additional context for these findings.
    Keywords: United States, Canada, job quality, Mexico, part-time, retail, schedule, working hours
    JEL: D22 J22 J23 J81 L81 P52
    Date: 2012–04
  14. By: Emin M. Dinlersoz; Jeremy Greenwood
    Abstract: Union membership displayed a ∩-shaped pattern over the 20th century, while the distribution of income sketched a ∪. A model of unions is developed to analyze these phenomena. There is a distribution of firms in the economy. Firms hire capital, plus skilled and unskilled labor. Unionization is a costly process. A union decides how many firms to organize and its members' wage rate. Simulation of the developed model establishes that skilled-biased technological change, which affects the productivity of skilled labor relative to unskilled labor, can potentially explain the above facts. Statistical analysis suggests that skill-biased technological change is an important factor in de-unionization.
    JEL: J23 J24 J51 L11 L16 L23 O14 O33
    Date: 2012–05
  15. By: Vu , Van Huong
    Abstract: Based on a unique matched firm-worker panel dataset between 2007 and 2009, empirical results show that export participation has a positive impact on wages when taking account of firm characteristics alone. However, exporter wage premium completely vanishes when both firm and worker characteristics are added simultaneously. This finding is also confirmed when controlling for time-invariant unobservable factors by spell fixed effect estimations. Furthermore, using a firm level balanced panel dataset in the same periods, the hypothesis of the positive role of export status on employment quality is rejected when it has a positive effect on the share of casual workers. However, this result is not robust across sectors and locations. Export participation continues to yield a positive impact on the share of casual worker in low tech sectors. However, a negative effect on employment quality is observed in high tech industries. The findings suggest that policies encouraging and supporting exporting should not only focus on the amount of employment created but also on the quality of employment, especially for low technology industries.
    Keywords: Export participation; wage; employment; Vietnam
    JEL: F16 F1
    Date: 2012–05–09
  16. By: Thomas Philippon
    Abstract: I provide a quantitative interpretation of financial intermediation in the U.S. over the past 130 years. Measuring separately the cost of intermediation and the production of financial services, I find that: (i) the quantity of intermediation varies a lot over time; (ii) intermediation is produced under constant returns to scale; (iii) the annual cost of intermediation is around 2% of outstanding assets; (iv) adjustments for borrowers' quality are quantitatively important; and (v) the unit cost of intermediation has increased over the past 30 years.
    JEL: E2 G2 N2
    Date: 2012–05
  17. By: Baum, Joel A.C. (University of Toronto); Cowan, Robin (UNU-MERIT/MGSoG, Maastricht University, and BETA, Universite de Strassbourg); Jonard, Nicolas (University of Luxembourg)
    Abstract: Although intuitively appealing (and common), drawing network strategy implications from empirical evidence of network performance effects in pooled cross-section is not necessarily warranted. This is because network positions can influence both the mean and variance of firm performance. Strategic prescriptions are warranted if empirically observed network effects reflect increases in mean firm performance. If network effects reflect increases in firm performance variance, however, such prescriptions are warranted only if the increase in the odds of achieving high performance is sufficient to compensate for the concomitant increase in the odds of realizing poor performance. Our simulation study, designed to examine network performance effects in both pooled cross-section and within-firm over time across a wide range of conditions, counsels caution in drawing implications for network strategies. We discuss the implications of our findings for research on network effects, and more broadly for drawing strategic inferences from studies of firm performance in pooled cross-section.
    Keywords: network formation, strategic alliances, innovation, network strategy, interfirm networks
    JEL: L14 L20 D85 O30
    Date: 2012
  18. By: Ioana Neamtu (Department of Economics and Business, Aarhus University, Denmark); Niels Westergård-Nielsen (Department of Economics and Business, Aarhus University, Denmark)
    Abstract: The recession started in 2008 constituted a massive shock to consumers and most firms all over the Western World. Firms were hit on their sales and finances. However, little is known on how badly they were hit and how they coped with the difficulties. This paper gives a rare and fairly early glimpse on how private Danish firms were hit and how they adjusted in order to survive the crisis. The first phase of the recession led to the largest loss of jobs since the oil crisis, in Denmark. Four years into the recession we see that larger firms are gradually creating jobs again, although the overall job growth is still negative (Statistics Denmark, 2012). Consequently we present an assessment of factors that have been important in explaining why some firms have been able to recreate jobs and others have not. Especially, we point at the critical role of access to credit in creating and destroying jobs. The paper is based on a survey run on all Danish firms with more than 20 employees in November and December 2011.
    Keywords: Crisis, impact on firms, credit constraints, job growth and destruction, survey
    JEL: J62 D22 E32 J33
    Date: 2012–05–14
  19. By: Haile, Getinet Astatike (University of Nottingham)
    Abstract: The paper examines if workplace gender diversity offers some explanation for the decline of unions in Britain. Using the WERS2004 linked employer-employee data and alternative econometric estimators it reports an inverse relationship between workplace union density and gender diversity. Gender and ownership status based sub-group analyses suggest the inverse relationship to be stronger for male union members and those in the private sector. Gender group size based analysis reveals a positive link between workplace union density and gender diversity in workplaces with a female majority. The findings in this paper may mean that unions (and their main constituents, men) may need to embrace the changing workplace demography genuinely to improve their fate.
    Keywords: trade union decline, gender diversity, linked employer-employee data, Britain
    JEL: J51 J16 J82
    Date: 2012–05

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