nep-bec New Economics Papers
on Business Economics
Issue of 2012‒09‒03
thirty-one papers chosen by
Christian Calmes
Universite du Quebec en Outaouais

  1. Employee Compensation in Entrepreneurial Companies By Bengtsson, Ola; Hand, John R. M.
  2. Firm Dynamics: Variation in Profitability Across Canadian Firms of Different Sizes, 2000 to 2009 By Lafrance, Amelie
  3. Are Founding Families Special Blockholders ? An Investigation of Controlling Shareholder Influence on Firm Performance By Isakov, Dusan; Weisskopf, Jean-Philippe
  4. On two-part tariff competition in a homogeneous product duopoly By Griva, Krina; Vettas, Nikolaos
  5. Strategic commitment to pursue a goal other than profit in a Cournot duopoly By Rtischev, Dimitry
  6. Who Creates Jobs? Estimating Job Creation Rates at the Firm Level By Peter Huber; Harald Oberhofer; Michael Pfaffermayr
  7. The Labor Market Consequences of Adverse Financial Shocks By Tito Boeri; Pietro Garibaldi; Espen R. Moen
  8. Good Skills in Bad Times: Cyclical Skill Mismatch and the Long-term Effects of Graduating in a Recession. By Liu, Kai; Salvanes, Kjell G.; Sørensen, Erik Ø.
  9. Competitive dynamics across industries: An analysis of inter-industry competition in German passenger transportation By Albers, Sascha; Heuermann, Caroline
  10. Costs of Low Productivity: Intensive and Extensive Margins By goksel, turkmen
  11. Credit Constraints, Quality, and Export Prices: Theory and Evidence from China By Fan, Haichao; Lai, Edwin L.-C.; Li, Yao Amber
  12. Subjective performance evaluations and reciprocity in principal-agent relations By Alexander Sebald; Markus Walzl
  13. It Takes Two to Tango: Entrepreneurship and Creativity in Troubled Times – Vietnam 2012 By Vu Dang Le Nguyen; Nancy K. Napier; Quan Hoang Vuong
  14. Collective versus Decentralized Wage Bargaining and the Efficient Allocation of Resources By Xiaoming Cai; Pieter A. Gautier; Makoto Watanabe
  15. An equilibrium analysis of efficiency gains from mergers By Jovanovic, Dragan; Wey, Christian
  16. Labour relations quality and productivity: An empirical analysis on French firms. By Cette, G.; Dromel, N.; Lecat, R.; Paret, A-C.
  17. Impact of Working Hours on Work-Life Balance By Sarah Holly; Alwine Mohnen
  18. The Trend is the Cycle: Job Polarization and Jobless Recoveries By Nir Jaimovich; Henry E. Siu
  19. Business Strategy and Overcoming Lack of Market Institutions upon Entering Emerging Markets - Case Study of Heiwado's Entry into China - By Yuki Kawabata; Kumiko Nisio
  20. Capital's Grabbing Hand? A Cross-Country/Cross-Industry Analysis of the Decline of the Labour Share By Andrea Bassanini; Thomas Manfredi
  21. Offshoring and the Skill Structure of Labour Demand By Gaaitzen De Vries; Neil Foster; Robert Stehrer
  22. Trade Union Membership and Sickness Absence: Evidence from a Sick Pay Reform By Laszlo Goerke; Markus Pannenberg
  23. Suggested retail prices with downstream competition By Simona Fabrizi; Steffen Lippert; Clemens Puppe; Stephanie Rosenkranz
  24. Innovation stratégique et business model des écosystèmes “mobiquitaires”: rôle et identification de l’acteur leader. By Amel Attour
  25. Uncertainty shocks are aggregate demand shocks By Sylvain Leduc; Zheng Liu
  26. Entrepreneurial Employee Activity: A Large Scale International Study By Niels Bosma; Erik Stam; Sander Wennekers
  27. 2011-1: Collective bargaining in the Dutch metal and electrical engineering industry By Maarten Klaveren; Kea Tijdens
  28. Mandatory Quality Disclosure and Quality Supply: Evidence from German Hospitals By Lapo Filistrucchi; Fatih Cemil Ozbugday
  29. The Value of Control and the Costs of Illiquidity By Albuquerque, Rui; Schroth, Enrique
  30. Humps in the Volatility Structure of the Crude Oil Futures Market By Carl Chiarella; Boda Kang; Christina Nikitopoulos-Sklibosios; Thuy-Duong To
  31. Hoping to Win, Expected to Lose: Theory and Lessons on Micro Enterprise Development By Karlan, Dean S.; Knight, Ryan; Udry, Christopher

  1. By: Bengtsson, Ola (Research Institute of Industrial Economics (IFN)); Hand, John R. M. (University of North Carolina Chapel Hill)
    Abstract: Despite the central role played by human capital in entrepreneurship, little is known about how employees in entrepreneurial firms are compensated and incentivized. We address this gap in the literature by studying 18,935 non-CEO compensation contracts across 1,809 privately-held venture-backed companies. Our key finding is that employee compensation varies with the degree to which VCs versus founders control the business. We show that relative to founder-controlled firms, VC-controlled firms pay their hired-on (i.e., non-founder) employees higher cash salaries, provide stronger cash and equity incentives, and have more formal pay policies in place. We also observe that founder employees earn less cash pay and face weaker cash incentives than do hired-on employees, but have stronger equity incentives. We propose that the compensation differences we identify arise because the preferences and capabilities of controlling shareholders significantly influence the quality of the human capital attracted and retained by the firm.
    Keywords: Venture capital; Entrepreneurship; Compensation contracts
    JEL: G24 J31 L26
    Date: 2012–08–13
  2. By: Lafrance, Amelie
    Abstract: Are small firms more profitable than large firms? This paper uses a longitudinal firm-level dataset to explore the financial performance of firms across size classes, and across industries and provinces during the 2000-to-2009 period. It also examines the volatility of profitability across firm size classes.
    Keywords: Business performance and ownership, Financial statements and performance, Small and medium-sized businesses
    Date: 2012–07–31
  3. By: Isakov, Dusan; Weisskopf, Jean-Philippe
    Abstract: This paper examines how family and non-family ownership affects the performance of Swiss listed firms from 2003 to 2010. We distinguish between these two types of controlling shareholders since they have different objectives. We hypothesise that only family shareholders have a real incentive to reduce agency costs whereas non-family blockholders are similar to widely held companies. Our results show that family firms are more profitable and sometimes display better market valuations as opposed to companies that are widely held or have a non-family blockholder. We investigate the impact of different features of family firms on performance, and document that the generation of the family, active involvement of the family and contestability of family control play an important role.
    Keywords: founding family firm; active management; founder; ownership structure; firm performance; contestability
    JEL: G3 G32
    Date: 2012–08–20
  4. By: Griva, Krina; Vettas, Nikolaos
    Abstract: We explore the nature of two-part tariff competition between duopolists providing a homogeneous service when consumers differ with respect to their usage rates. Competition in only one price component (the fixed fee or the rate) may allow both firms to enjoy positive profits if the other price component has been set at levels different enough for each firm. Endogenous market segmentation emerges, with the heavier users choosing the lower rate firm and the lighter users choosing the lower fee firm. We therefore characterize how fixing one price component indirectly introduces an element of product differentiation to an otherwise homogeneous product market. We also examine the crucial role that non-negativity constraints play for the nature of market equilibrium.
    Keywords: Market segmentation; Non-linear pricing; Two-part tariffs
    JEL: D43 L13
    Date: 2012–08
  5. By: Rtischev, Dimitry
    Abstract: Competition among profit-seeking firms in an oligopolistic industry inherently generates incentives for firms to commit to maximize a performance metric other than profit. We briefly review the underlying theory, analyze its ramifications in a Cournot duopoly, and consider feasibility constraints from the perspective of strategic management.
    Keywords: oligopolistic competition; strategic commitment; strategic delegation
    JEL: L13 L21 D43
    Date: 2012–07–01
  6. By: Peter Huber (WIFO); Harald Oberhofer; Michael Pfaffermayr (WIFO)
    Abstract: This paper shows that applying simple employment-weighted OLS estimation to Davis – Haltiwanger – Schuh (1996) firm level job creation rates taking the values 2 and –2 for entering and exiting firms, respectively, provides biased and inconsistent parameter estimates. Consequently, we argue that entries and exits should be analysed separately and propose an alternative, consistent estimation procedure assuming that the size of continuing firms follows a lognormal distribution. A small-scale Monte Carlo analysis confirms the analytical results. Using a sample of Austrian firms, we demonstrate that the impact of small firms on net job creation is substantially underestimated when applying employment-weighted OLS estimation.
    Keywords: Job creation, DHS growth rate, firm size, firm age, Monte Carlo simulation
    Date: 2012–08–27
  7. By: Tito Boeri; Pietro Garibaldi; Espen R. Moen
    Abstract: The recent financial crises, alongside a dramatic rise in unemployment on both sides of the Atlantic, suggest that financial shocks do translate into the labor markets. In this paper we first document that financial recessions amplify labor market volatility and Okun's elasticity over the business cycle. Second, we highlight a key mechanisms linking financial shocks to job destruction, presenting and solving a simple model of labor market search and endogenous finance. While finance increases job creation and net output in normal times, it also augments their aggregate response in the aftermath of a financial shock. Third, we present evidence coherent with the idea that more leveraged sectors experience larger employment volatility during financial recessions. Theoretically, the job destruction effect of finance works as follows. Leveraged firms may find them- selves in a position in which their liquidity is suddenly called back by the lender. This has direct consequences on a firm ability to run and manage e xisting jobs. As a result, firms may be obliged to shut down part of their operations and destroy existing jobs. We argue that with well developed capital markets, firms will have an incentive to rely more on liquidity, and in normal times deep capital markets lead to tight labor markets. After an adverse liquidity shock, firms that rely much on liquidity, are hit disproportionally hard. This may explain why the unemployment rate in the US during the Great Recession increased more than in European countries experiencing larger output losses. Empirically, the paper uses a variety of datasets to test the implications of the model. At first we identify crises that, just like in the model, caused a sudden reduction of liquidity to firms. Next we draw on sector-level data on employment and leverage in a number of OECD countries at quarterly frequencies to assess whether highly leveraged equilibria originate more employment adjustment under financial recessions. We find that highly leveraged sectors and periods are associated with higher employment-to-output elasticities during banking crises and this effect explains the observation of higher Okun's elasticities during financial recessions. We also argue that the effect of leverage on employment adjustment can be interpreted as a causal effect, if our identification assumptions are considered plausible. All this amounts essentially for a test of the labor demand channel of adjustment. keywords: credit squeeze,matching,leverage JEL codes: G01,J23,J63
    Date: 2012
  8. By: Liu, Kai (Dept. of Economics, Norwegian School of Economics and Business Administration); Salvanes, Kjell G. (Dept. of Economics, Norwegian School of Economics and Business Administration); Sørensen, Erik Ø. (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: We show that cyclical skill mismatch, defined as mismatch between the skills supplied by college graduates and skills demanded by hiring industries, is an important mechanism behind persistent career loss from graduating in recessions. Using Norwegian data, we find a strong countercyclical pattern of skill mismatch among college graduates. Initial labor market conditions have a declining but persistent effect on the probability of mismatch early in their careers. We provide a simple model of industry mobility that is consistent with our empirical findings. The initially mismatched graduates are also more vulnerable to business cycle variations at the time of graduation.
    Keywords: Skill mismatch; business cycles
    JEL: E32 J31 J62
    Date: 2012–08–17
  9. By: Albers, Sascha; Heuermann, Caroline
    Abstract: Whereas analyses of competitive dynamics have hitherto focused on analysing the effects of intra-industry interaction on firm performance, we explore and analyse competition between actors that stem from different industries. This inter-industry focus is novel and interesting, as it allows the exploration of competitive parameters between rivals that differ substantially in their resource endowments, organisational structures, practices and cognitive schemes. The inter-industry focus is also important, since many industries are converging and thus instil competitive interaction between actors that were traditionally separated by industry boundaries. The empirical context for this study is the competitive interaction between airlines and railways in Germany. Based on expert interviews and grounded theory analysis, we shed light onto hitherto neglected facets of awareness, motivation and capability as drivers of competitive actions. We thereby contribute to both competitive dynamics as well as transport strategy literatures. --
    Keywords: strategy,competitive dynamics,air transport,railway
    JEL: L10 L91 M19
    Date: 2012
  10. By: goksel, turkmen
    Abstract: This paper discusses welfare costs of a decrease in productivity and argues that there are two important channels which cause a reduction in welfare: a decrease in output per firm (intensive margin) and a decrease in number of operating firms (extensive margin). Traditional Dixit-Stiglitz monopolistic competition framework with constant elasticity of substitution utility and common productivity across firms fail to capture the extensive margin. To address this problem, this paper introduces “continuum-quadratic” utility (i.e. linear demand system) while keeping the other assumptions unchanged and finds that lowering productivity affects not only the intensive but extensive margin as well.
    Keywords: productivity; quadratic utility; monpolistic competition
    JEL: L00
    Date: 2012–01
  11. By: Fan, Haichao; Lai, Edwin L.-C.; Li, Yao Amber
    Abstract: This paper examines (i) the relationship between the credit constraints faced by a firm and the unit value prices of its exports, as well as (ii) the relationship between the export prices of a firm and its productivity. The paper extends Melitz's (2003) model of trade with heterogeneous firms by introducing endogenous quality, credit constraints and marketing costs. There are three key findings. First, there exists a positive relationship between firm productivity and export prices because the choice of higher-quality inputs is associated with higher productivity. Second, tighter credit constraints faced by a firm reduces its optimal prices as its choice of lower-quality inputs dominates the price distortion effect resulting from credit constraints. Third, if one adopts the alternative assumption that quality is exogenous across firms, then completely opposite results would be expected: there would be a negative relationship between prices and productivity; prices increase as firms face tighter credit constraints. An empirical analysis using Chinese bank loans data, Chinese firm-level data from the National Bureau of Statistics of China (NBSC), and Chinese customs data strongly supports the predictions of the endogenous-quality model, and confirms the existence of the quality adjustment effect: firms optimally choose lower quality when facing tighter credit constraints. Our finding of a significant impact of credit constraints on export prices indicates the prevalence of heterogeneity of product quality across firms.
    Keywords: credit constraints; credit access; credit needs; endogenous quality; export prices; quality; heterogeneous firms; productivity
    JEL: G2 D2 F1 L1
    Date: 2012–08–01
  12. By: Alexander Sebald; Markus Walzl
    Abstract: We conduct a laboratory experiment with agents working on and principals benefitting from a real effort task in which the agents' performance can only be evaluated subjectively. Principals give subjective performance feedback to agents and agents have an opportunity to sanction principals. In contrast to existing models of reciprocity we find that agents tend to sanction whenever the feedback of principals is below their subjective self-evaluations even if agents' payoffs are independent of it. In turn, principals provide more positive feedback (relative to their actual performance assessment of the agent) if this does not affect their payoffs.
    Keywords: Contracts, Subjective Performance Evaluations, Reciprocity
    JEL: D01 D02 D82 D86 J41
    Date: 2012–08
  13. By: Vu Dang Le Nguyen; Nancy K. Napier; Quan Hoang Vuong
    Abstract: Strikingly, most literature suggests that market competition will push firms to take creativity/innovation seriously as matter of death or survival. Using the data, we examined creativity methods (Napier and Nilsson, 2008; Napier, 2010) in conjunction with three influential cultural values – namely risk tolerance, relationship, and dependence on resources – to assess how they influence decisions of entrepreneurs.The primary objective of this study focuses on perceived values of entrepreneurship and creativity in business conducted within a turbulent environment. Our initial hypothesis is that a typical entrepreneurial process carries with it “creativity-enabling elements.” In a normal situation, when businesses focus more on optimizing their resources for commercial gains, perceptions about values of entrepreneurial creativity are usually vague. However, in difficult times and harsh competition, the difference between survival and failure may be creativity. This paper also examines many previous findings on both entrepreneurship and creativity and suggests a highly possible “organic growth” of creativity in an entrepreneurial environment and reinforcing value of entrepreneurship when creativity power is present. In other words, we see each idea reinforcing the other. We use data from a survey of sample Vietnamese firms during the chaotic economic year 2012 to learn about the ‘entrepreneurshipcreativity nexus.’ A data set of 137 responses qualified for a statistical examination was obtained from an online survey, which started on February 16 and ended May 24, 2012, sent to local entrepreneurs and corporate managers using social networks. The authors employed categorical data analysis (Agresti, 2002; Azen & Walker, 2011). Statistical analyses confirm that for business operation, the creativity and entrepreneurial spirit could hardly be separate; and, this is not only correct with entrepreneurial firm, but also well established companies. The single most important factor before business startup and during early implementation in Vietnam is what we call “connection/relationship.” However, businesspeople are increasingly aware of the need of creativity/innovation. In fact, we suggest that creativity and entrepreneurial spirit cannot be separated in entrepreneurial firms as well as established companies.
    Keywords: Creativity; Entrepreneurship; Economic Transition; Vietnam
    JEL: C42 M13 O31 P27
    Date: 2012–08
  14. By: Xiaoming Cai (VU University Amsterdam); Pieter A. Gautier (VU University Amsterdam); Makoto Watanabe (VU University Amsterdam)
    Abstract: An advantage of collective wage agreement is that search and business-stealing externalities can be internalized. A disadvantage is that it takes more time before an optimal allocation is reached because more productive firms (for a particular worker type) can no longer signal this by posting higher wages. Specifically, we consider a search model with two sided heterogeneity and on-the-job search. We compare the most favorable case of a collective wage agreement (i.e. the wage that a planner would choose under the constraint that all firms in a sector-ocupation cell must offer the same wage) with the case without collective wage agreement. We find that collective wage agreements are never desirable if firms can commit ex ante to a wage and only desirable if firms cannot commit and the relative efficiency of on the job search to off- the job search is less than 20%. This result is hardly sensitive to the bargaining power of workers. Empirically we find both for the Netherlands and the US that this value is closer to 50%.
    Keywords: Collective wage agreements; on-the-job search; efficiency
    JEL: E24 J62 J63 J64
    Date: 2012–08–28
  15. By: Jovanovic, Dragan; Wey, Christian
    Abstract: We analyze the efficiency defense in merger control. First, we show that the relationship between exogenous efficiency gains and social welfare can be non-monotone. Second, we consider both endogenous mergers and endogenous efficiencies and find that merger proposals are largely aligned with a proper social welfare analysis which explicitly considers the without merger counterfactual. We demonstrate that the merger specificity requirement does not help much to select socially desirable mergers; to the contrary, it may frustrate desirable mergers inducing firms not to claim efficiencies at all. --
    Keywords: Horizontal Mergers,Efficiency Defense,Merger Specific Efficiencies
    JEL: K21 L13 L41
    Date: 2012
  16. By: Cette, G.; Dromel, N.; Lecat, R.; Paret, A-C.
    Abstract: This analysis characterizes empirically how good labour relations can alleviate the negative impact on productivity of regulatory constraints or workforce opposition. Our evidence of good labour relations lies in the existence of binding collective agreements, at the firm or at the industry level. The estimations are based on a unique dataset collected by the Banque de France about the obstacles French firms may face in increasing their utilisation of production factors. Data are an unbalanced sample of 7,441 observations, corresponding to 1,545 companies, over the period 1991-2008. Our main results may be summarised as follows: i) ‘workforce or union opposition’ interacted with ‘regulatory constraints’ has a negative significant impact on total factor productivity (TFP). Regulatory constraints would become really binding when workers or unions use them as a tool to oppose management’s decisions; ii) ‘regulatory constraints’ interacted with ‘branch or firm agreement’ has a positive significant impact on TFP. These agreements, which can only be obtained if labour relations are supportive, would be used by firms to offset the negative impact of regulatory constraints. These results confirm that labour relations quality, at the branch or the firm levels, is an important factor of productive performance.
    Keywords: Labour relation, collective bargaining, trade unions, productivity.
    JEL: J53 J52 J51
    Date: 2012
  17. By: Sarah Holly; Alwine Mohnen
    Abstract: To examine the influence of working hours on employees’ satisfaction, this article uses a large, representative set of panel data from German households (GSOEP). The results show that high working hours and overtime in general do not lead to decreased satisfaction. Rather, increasing working hours and overtime have positive effects on life and job satisfaction, whereas the desire to reduce working hours has a negative impact on satisfaction. In 2009, nearly 60% of employees wanted to reduce their working hours. The overall number of hours by which employees want to reduce their working time is driven mainly by overtime compensation.
    Keywords: Satisfaction, overtime, work–life balance, working hours, working time arrangements
    JEL: J22 J28 J81 M12
    Date: 2012
  18. By: Nir Jaimovich; Henry E. Siu
    Abstract: Job polarization refers to the recent disappearance of employment in occupations in the middle of the skill distribution. Jobless recoveries refers to the slow rebound in aggregate employment following recent recessions, despite recoveries in aggregate output. We show how these two phenomena are related. First, job polarization is not a gradual process; essentially all of the job loss in middle-skill occupations occurs in economic downturns. Second, jobless recoveries in the aggregate are accounted for by jobless recoveries in the middle-skill occupations that are disappearing.
    JEL: E0 J0
    Date: 2012–08
  19. By: Yuki Kawabata (International University of Japan); Kumiko Nisio (Kyoto Women's University)
    Abstract: The purpose of this study is to examine how businesses confront lack of market institutions when entering an emerging market and building and implementing a business model to realize a corporate business strategy, in addition to how those businesses respond to the lack and establish competitive superiority. The case study used in our research was Heiwado Co., Ltd., a retailer that has established stores mainly in Shiga prefecture and that started business in China's Hunan Province in 1990. This case study allowed us to confirm that lack of market institutions impart a significant impact on the success or failure of a company's entrance into an emerging market, and also that adroitly handling these restrictions allows a company to build and implement a business model with competitive superiority.
    Keywords: Business strategy, Business model, Institutional Voids, Responses
    Date: 2012–08
  20. By: Andrea Bassanini; Thomas Manfredi
    Abstract: We examine the determinants of the within-industry decline of the labour share, using industry-level annual data for 25 OECD countries, 20 business-sector industries and covering up to 28 years. We find that total factor productivity growth – which captures (albeit imprecisely) capital-augmenting or labour-replacing technical change – and capital deepening jointly account for as much as 80% of the within-industry contraction of the labour share. We also find that other important factors are privatisation of state-owned enterprises and the increase in international competition as well as off-shoring of intermediate stages of the production process. By contrast, we are unable to detect any effect from increases in domestic competition brought about by entry deregulation.<BR>Nous examinons les déterminants du recul intrasectoriel de la part du travail, en utilisant des données sectorielles pour 25 pays de l’OCDE et 20 secteurs marchands sur une période couvrant jusqu’à 28 années. Nous trouvons que la croissance de la productivité totale des facteurs – qui peut représenter le progrès technique qui augmente la productivité du capital ou remplace le facteur travail – et l’accroissement de l’intensité capitalistique ont représenté ensemble à peu près 80 % de la diminution intrasectorielle moyenne de la part du travail dans les pays de l’OCDE. Nous trouvons aussi que d’autres facteurs importants sont la privatisation des entreprises publiques dans le secteur marchand ainsi que l’accroissement de la concurrence internationale et des délocalisations à l’étranger de la production de biens intermédiaires. Par contre, nous ne pouvons pas détecter un quelconque effet de l’accroissement de la concurrence intérieure résultant de la déréglementation de l’entrée sur les marchés des produits.
    JEL: I30
    Date: 2012–07–04
  21. By: Gaaitzen De Vries; Neil Foster (The Vienna Institute for International Economic Studies, wiiw); Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: In this paper we examine the link between international outsourcing – or offshoring – and the skill structure of labour demand for a sample of 40 countries over the period 1995 2009. The paper uses data from the recently compiled World-Input-Output-Database (WIOD) to estimate a system of variable factor demand equations. These data allow us to exploit both a cross-country and cross-industry dimension and split employment into three skill categories. Our results indicate that while offshoring has impacted negatively upon all skill levels, the largest impacts have been observed for medium-skilled (and to a lesser extent high-skilled) workers. Such results are consistent with recent evidence indicating that medium-skilled workers have suffered to a greater extent than other skill types in recent years.
    Keywords: offshoring, trade, wages, labour demand
    JEL: F14 J31
    Date: 2012–06
  22. By: Laszlo Goerke; Markus Pannenberg
    Abstract: In 1996, statutory sick pay was reduced for private sector workers in Germany. Using the empirical observation that trade union members are dismissed less often than non-members, we construct a model to predict how absence behaviour will respond to the sick pay reform. We show that union members may have stronger incentives to be absent and to react to the cut in sick pay. In the empirical investigation, we find a positive relationship between trade union membership and absence due to sickness and observe more pronounced reactions to the cut in sick pay among union members than among non-members. These findings suggest that more flexibility in the use of paid absence due to sickness constitutes a private gain from trade union membership.
    Keywords: Difference-in-differences, sickness-related absence, Socio-Economic Panel (SOEP), statutory sick pay, trade union membership
    JEL: I18 J51 J22
    Date: 2012
  23. By: Simona Fabrizi; Steffen Lippert; Clemens Puppe; Stephanie Rosenkranz
    Abstract: We analyze vertical relationships between a manufacturer and competing retailers when consumers have reference-dependent preferences. Consumers adopt the manufacturer's suggested retail price as their reference price and perceive losses when purchasing above the suggested price and gains when purchasing below it. In equilibrium, retailers undercut price suggestions and the manufacturer suggests a retail price if consumers are sufficiently bargain-loving and perceive retailers as sufficiently undifferentiated. The manufacturer engages in resale price maintenance otherwise. Consumers can be worse off with suggested retail prices than with resale price maintenance, prompting a rethinking of the current legal treatment of suggested retail prices.
    Keywords: suggested or recommended retail prices, resale price maintenance, reference-dependent preferences, vertical restraints, competition law and policy
    JEL: D03 D43 K21 L42
    Date: 2012–08
  24. By: Amel Attour
    Abstract: Au sein d’un écosystème, plusieurs entreprises peuvent endosser le rôle de firme pivot. Cette recherche propose une grille de lecture permettant d’identifier qui et quelles caractéristiques permettent à une firme pivot de se positionner dans le rôle de leader dans les différentes phases du cycle de vie de l’écosystème. Pour cela elle relève d’une démarche ingénierique au sens de Chanal et al. (1997) et s’appuie sur le projet « Nice Futur Campus (NFCampus) » et montre que seule deux fonctions du business model d’une innovation peuvent octroyer le rôle de leader à une firme pivot.
    Keywords: business models, écosystème d’affaires, innovation, mobiquité, firme pivot.
    Date: 2012
  25. By: Sylvain Leduc; Zheng Liu
    Abstract: We study the macroeconomic effects of uncertainty shocks in a DSGE model with labor search frictions and sticky prices. In contrast to a real business cycle model, the model with search frictions implies that uncertainty shocks reduce potential output, because a job match represents a long-term employment relation and heightened uncertainty reduces the value of a match. In the sticky-price equilibrium, an uncertainty shock--regardless of its source--consistently acts like an aggregate demand shock because it raises unemployment and lowers inflation. We present empirical evidence--based on a vector autoregression model and using a few alternative measures of uncertainty--that supports the theory's prediction that uncertainty shocks are aggregate demand shocks.
    Keywords: Uncertainty ; Inflation (Finance) ; Unemployment
    Date: 2012
  26. By: Niels Bosma; Erik Stam; Sander Wennekers
    Abstract: This paper presents the results of the first large scale international comparative study of entrepreneurial employee activity (intrapreneurship). Intrapreneurship is a more wide-spread phenomenon in high income countries than in low income countries. At the organizational level, intrapreneurs have relatively high job growth expectations for their new business activities, as compared with independent young businesses. At the individual level, intrapreneurs are much more likely to have the intention to start a new independent business than other employees. However, at the country level there is a negative correlation between intrapreneurship and early- stage entrepreneurial activity. An explanation for these contrasting outcomes is the diverging effect of per capita income on intrapreneurship (positive effect) and early- stage entrepreneurial activity (negative effect). Underlying mechanisms include the role of larger firm presence, of higher education and of the opportunity costs of independent entrepreneurship.
    Keywords: entrepreneurial employee activity, intrapreneurship, independent entrepreneurial activity, economic development, institutions
    JEL: J83 L26 M13 O43 O57
    Date: 2012–08
  27. By: Maarten Klaveren (AIAS, Universiteit van Amsterdam); Kea Tijdens (AIAS / FEB, Universiteit van Amsterdam)
    Abstract: *The story of the metal and electrical engineering collective agreement* The current collective labour agreement covering the Dutch metal and electrical engineering industry dates as of 1985, when the earlier agreement was divided in an agreement for firms with 31 or more employees (the ‘large metal industry’) and for smaller firms (the ‘small metal industry’). We concentrate on the first one, called in Dutch CAO Metaal/Elektrotechnische industrie, currently covering about 150,000 employees. In the 1980s, this agreement remained the wage leader in the Dutch industrial relations like its predecessor had been before, but in the 1990s the collective agreement gradually lost its leadership; the collective agreement for banking, soon to be split up in agreements for the various large banks, took over. Most recently, while wage increases remained slightly higher in the CAO Metaal/Elektrotechnische industrie, the small metal industry contained more innovative elements. Major explanations may be found in the heavy international competition to which large parts of ‘large metal’ were exposed, in the fact that small metal firms seem more inclined to negotiate integrative elements, in particular concerning training, with the trade unions, and a remarkably successful strike mobilisation of the union membership in small firms. ...
    Date: 2012–08
  28. By: Lapo Filistrucchi (Università degli Studi di Firenze,); Fatih Cemil Ozbugday
    Abstract: Using a newly constructed dataset on German hospitals, which includes 24 process and outcome indicators of clinical quality, we test whether quality has increased in various clinical areas since the introduction of mandatory quality reports and the online publication of part of the collected quality measures. Our results suggest that process indicators of clinical quality have increased significantly in 2008 compared to 2006. In addition, the hospitals underperforming in 2006 appear to have increased their clinical quality relatively more than the other hospitals. When instead quality is measured by outcome indicators, average clinical quality is estimated to have increased for underperforming hospitals and decreased for the best performing hospitals in 2006, so that on average across all hospitals the changes in outcome indicators are insignificant for just more than half of the outcome quality measures. We further show that the best performing hospitals in 2006 in terms of outcome quality measures experienced an increase in their share of patients in 2008, thus providing indirect evidence that patients react to disclosed quality. Interestingly, the best performing hospitals in 2006 in terms of process quality measures did not experience a significant change in their share of patients in 2008, thus suggesting that patients react more to output than to process measures of quality. Finally, for the subset of hospitals who offer services in obstetrics, we find that higher competitive pressure, measured as the number of competitors in a given radius, is associated with a higher increase in quality following quality disclosure. We argue that the latter effect is unlikely to be due to selection of patients by hospitals.
    Keywords: health care; hospitals; quality disclosure; quality competition; Germany
    JEL: I11 L41 L44 C23
    Date: 2012
  29. By: Albuquerque, Rui; Schroth, Enrique
    Abstract: An inherent difficulty in valuing controlling blocks of shares is the illiquidity of the market. We explore the pricing implications associated with the illiquidity of controlling blocks of shares in the context of a search model of block trades. The model considers several dimensions of illiquidity. First, following a liquidity shock, the controlling blockholder is forced to sell, possibly to a less efficient acquirer. Second, this sale may occur at a fire sale price. Third, absent a liquidity shock, a trade occurs only if a potential buyer arrives. We use a structural estimation approach and U.S. data on trades of controlling blocks of public corporations to identify these dimensions of illiquidity. We obtain estimates of counter-factual valuations that would result in the absence of illiquidity, which are used to measure the blockholders' marketability and control discounts and the dispersed shareholders' illiquidity-spillover discount.
    Keywords: control discount; Control transactions; corporate governance; illiquidity spillover; marketability discount; search frictions
    JEL: G34
    Date: 2012–08
  30. By: Carl Chiarella (Finance Discipline Group, UTS Business School, University of Technology, Sydney); Boda Kang (Finance Discipline Group, UTS Business School, University of Technology, Sydney); Christina Nikitopoulos-Sklibosios (Finance Discipline Group, UTS Business School, University of Technology, Sydney); Thuy-Duong To (University of New South Wales)
    Abstract: This paper analyzes the volatility structure of commodity derivatives markets. The model encompasses stochastic volatility that may be unspanned by futures contracts. A generalized hump-shaped volatility specification is assumed that entails a finite-dimensional affine model for the commodity futures curve and quasi-analytical prices for options on commodity futures. An empirical study of the crude oil futures volatility structure is carried out using an extensive database of futures prices as well as futures option prices spanning 21 years. The study supports a hump-shaped, partially spanned stochastic volatility specification. Factor hedging, which takes into account shocks to both the volatility processes and the futures curve, depicts the presence of unspanned components in the volatility of commodity futures and the outperformance of the hump-shaped volatility in comparison to the more popular exponential decaying volatility. This hump shaped feature is more pronounced when the market is volatile.
    Keywords: commodity derivatives; crude oil derivatives; Unspanned stochastic volatility; hump-shaped volatility; pricing; hedging
    Date: 2012–06–01
  31. By: Karlan, Dean S.; Knight, Ryan; Udry, Christopher
    Abstract: Many basic economic theories with perfectly functioning markets do not predict the existence of the vast number of microenterprises readily observed across the world. We put forward a model that illuminates why financial and managerial capital constraints may impede experimentation, and thus limit learning about the profitability of alternative firm sizes. The model shows how lack of information about one’s own type, but willingness to experiment to learn one’s type, may lead to short-run negative expected returns to investments on average, with some outliers succeeding. To test the model we put forward first a motivating experiment from Ghana, and second a small meta-analysis of other experiments. In the Ghana experiment, we provide inputs to microenterprises, specifically financial capital (a cash grant) and managerial capital (consulting services), to catalyze adoption of investments and practices aimed towards enterprise growth. We find that entrepreneurs invest the cash, and take the advice, but both lead to lower profits on average. In the long run, they revert back to their prior scale of operations. The small meta analysis includes results from 18 other experiments in which either capital or managerial capital were relaxed, and find mixed support for this theory.
    Keywords: business training;; consulting; credit constraints; entrepreneurship; managerial capital
    JEL: D21 D24 D83 D92 L20 M13
    Date: 2012–08

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