nep-bec New Economics Papers
on Business Economics
Issue of 2013‒02‒08
nine papers chosen by
Vasileios Bougioukos
Bangor University

  1. Dynamics of productivity and cost of labor in Italian Manufacturing firms By G. Bottazzi; M. Grazzi
  2. Employment Policies, Hiring Practices and Firm Performance By Sylvie Blasco; Barbara Pertold-Gebicka
  3. Firm size and judicial efficiency: evidence from the neighbour's court By Silvia Giacomelli; Carlo Menon
  4. Unbundling Technology Adoption and tfp at the Firm Level. Do Intangibles Matter? By Michele Battisti; Filippo Belloc; Massimo Del Gatto
  5. The Internationalization Process of Firms: from Exports to FDI By Paola Conconi; André Sapir; Maurizio Zanardi
  6. State-Owned Enterprises, Exporting and Productivity in China: A Stochastic Dominance Approach By Robert Elliott; Ying Zhou
  7. Infrastructure Upgrades and Foreclosure with Coexistence of Service-Based and Facility-Based Firms By Noriaki Matsushima; Keizo Mizuno
  8. Unemployment and endogenous reallocation over the business cycle By Carlos Carrillo-Tudela; Ludo Visschers
  9. Just Enough or All: Selling a Firm By Mehmet Ekmekci; Nenad Kos; Rakesh Vohra

  1. By: G. Bottazzi; M. Grazzi
    Abstract: This paper studies the impact of size on labor cost and productivity for Italian manufacturing firms. The distributions of both labor cost and productivity display a wide support, even when disaggregated by sector of industrial activity. Further, both labor cost and productivity, when considered alone, are growing with the size of the firm. We investigate this relationship on a new set of data and we are able to show that once accounted for productivity differences among firms, size still retains a positive effect on cost of labor in most of the sectors considered.
    JEL: D21 J31 L11 L60
    Date: 2013–02
  2. By: Sylvie Blasco (CREST); Barbara Pertold-Gebicka (Aarhus Université)
    Abstract: In this paper we investigate how active labour market policy programmes affect firms' hiring strategies and, eventually, firms' performance. We focus on counseling and monitoring which may reduce search costs for employers, but which may have ambiguous effect on the employer- employee matching quality and thus on firms' performance. Using a large scale experiment which was conducted in Denmark in 2005-2006 and induced a greater provision of activation, we find that small firms hiring in the districts where the social experiment was conducted changed their hiring practices in favor of unemployed workers and experienced greater turnover than the other firms. Treated firms also experienced no change or a marginal reduction in value added and total factor productivity during the first years after the experiment. These results are consistent with the idea that monitoring creates compulsion effects which counteract the possible improvement in the matching process expected from job search assistance.
    Keywords: active labour market programmes, counseling and monitoring,hiring decisions,firms performance
    JEL: C21 J63 J68
    Date: 2012–11
  3. By: Silvia Giacomelli (Bank of Italy); Carlo Menon (OECD and Bank of Italy)
    Abstract: We investigate the causal relationship between judicial efficiency and firm size across Italian municipalities exploiting spatial discontinuities in court jurisdictions for identification. The estimated coefficients suggest that the reduction of the length of civil proceedings could exert, all other things being equal, a significant and positive effect on the average size of Italian firms. Results are robust to a number of different specifications, based on two different databases.
    Keywords: judicial efficiency, firm size, spatial discontinuity, Italy
    JEL: K4 L11 O18
    Date: 2013–01
  4. By: Michele Battisti (University of Palermo, CeLEG LUISS Guido Carli and RCEA); Filippo Belloc (“G. d'Annunzio” University); Massimo Del Gatto (“G. d'Annunzio” University and CRENoS)
    Abstract: We use a panel of European firms to investigate the relationship between intangible assets and productivity. We disentangle between tfp and technology adoption, while available studies so far have considered only a notion of productivity conflating the two effects. To this aim, we estimate production function parameters allowing, within each sector, for the existence of multiple technologies. We find that intangible assets both push the firm towards better technologies (technology adoption effects) and allow for a more efficient exploitation of a given technology (tfp effects).
    Keywords: TFP, Intangible Assets, Heterogeneity, Firm Selection, Technology Adoption, Mixture Models
    JEL: C29 D24 F12 O32
    Date: 2012–12
  5. By: Paola Conconi; André Sapir; Maurizio Zanardi
    Abstract: This paper shows that uncertainty can lead firms to follow a gradual internationalizationprocess. We describe a model in which firms are uncertain abouttheir ability to earn profits in a foreign market and must decide whether or notto serve it, and whether to do so through exports or foreign affiliate sales. Weshow that a firm may first test the foreign market via exports, before engagingin foreign direct investment (FDI). To assess the evidence, we exploit a uniquedataset of firm-level exports and FDI in individual destination countries, coveringall Belgian companies over the 1998-2008 period. We show that a firm's FDI entryin a foreign market is almost always preceded by its export entry. More uncertainforeign market conditions lead new exporters to delay FDI entry decisions. Ouranalysis suggests that exports and FDI, although substitutes from a static perspective,may be complements over time, since the knowledge acquired throughexport experimentation can lead firms to start investing abroad.
    Keywords: uncertainty; experimentation; exports; FDI
    JEL: F10 D21 F13
    Date: 2013–01
  6. By: Robert Elliott; Ying Zhou
    Abstract: A popular explanation for China's rapid economic growth in recent years has been the dramatic increase in the number of private domestic and foreign-owned firms and a decline in the state-owned sector. However, recent evidence suggest that China's state-owned enterprise (SOEs) are in fact stronger than ever. In this paper we examine over 78,000 manufacturing firms between 2002 and 2006 to investigate the relationship between ownership structure and the degree of firm-level exposure to export markets and firm-level productivity. Using a conditional stochastic dominance approach we reveal that although our results largely adhere to prior expectations, the performance of state-owned enterprises differs markedly between those that export and those that supply the domestic market only. It appears that China's internationally focused SOEs have become formidable global competitors.
    Keywords: Productivity, China, firm-level, State-owned enterprise, heterogeneity, stochastic dominance
    JEL: L2 L3 P3 D2
    Date: 2013–01
  7. By: Noriaki Matsushima; Keizo Mizuno
    Abstract: We investigate the incentives for facility-based firms to invest in infrastructure upgrades and to foreclose service-based firms. We focus on asymmetric regulation regarding service-based firms' access to the infrastructure held by a facility-based firm. Spillovers from the infrastructure upgrades made by a regulated facility-based firm on service-based firms play a key role in the incentives for making these upgrades. The spillover effect can enhance the incentives for the regulated facility-based firm to make upgrades if access prices are not regulated. The existence of rival facility-based firms strengthens the incentives for a regulated facility-based firm to make infrastructure upgrades, especially when the spillover effect is significant. Furthermore, if access prices are not regulated, the existence of rival facility-based firms weakens the incentives for a regulated facility-based firm to foreclose service-based firms.
    Date: 2012–12
  8. By: Carlos Carrillo-Tudela; Ludo Visschers
    Abstract: We build an analytically and computationally tractable stochastic equilibrium model of unemployment in heterogeneous labor markets. Facing search frictions within markets and reallocation frictions between markets, workers endogenously separate from employment and endogenously reallocate between markets, in response to changing aggregate and local conditions. Empirically, using the 1986-2008 SIPP panels, we document the occupational mobility patterns of the unemployed, finding notably that occupational change of unemployed workers is procyclical. The heterogeneous-market model yields highly volatile countercyclical unemployment, and is simultaneously consistent with procyclical reallocation, countercyclical separations and a negativelysloped Beveridge curve. Moreover, the model exhibits unemployment duration dependence, which (when calibrated to long-term averages) responds realistically to the business cycle, creating substantial longer-term unemployment in downturns. Finally, the model is also consistent with different employment and reallocation outcomes as workers gain experience in the labor market, on average and over the business cycle.
    Keywords: Unemployment, Business Cycle, Search, Endogenous Separations, Reallocation, Occupational Mobility
    JEL: E24 E30 J62 J63 J64
    Date: 2013–01
  9. By: Mehmet Ekmekci; Nenad Kos; Rakesh Vohra
    Abstract: We consider the problem of selling a firm to a single buyer. The magnitude of the post-sale cash flow rights (v) as well as the benefits of control (b) are the buyer’s private information. In contrast to research that assumes the private information of the buyer is one-dimensional, the optimal mechanism is a menu of tuples of cashequity mixtures. We provide sufficient conditions on the joint distribution of v and b such that the optimal mechanism takes one of the following forms: i) a take-it or leave-it offer for the smallest fraction of the company that facilitates the transfer of control, or ii) a take-it or leave-it offer for all the shares of the company. We also identify a sufficient condition for the seller to extract the full value, v, per share so that the buyer earns information rents only on the private benefits of control. JEL Code: D82, D86. Keywords: Multidimensional mechanism design, negotiated block trades, private benefits, privatization, takeovers, bilateral trade, asymmetric information, cashequity offers.
    Date: 2013

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