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on Business Economics |
| By: | Basuchoudhary, Atin; Conlon, John R. |
| Abstract: | This paper studies how cartel stability is influenced by asymmetric information and communication about demand. Firms in a cartel face fluctuating demand in a repeated game framework. In each period, one randomly chosen firm knows current demand. In this context we consider two different equilibria -- one where the informed firm communicates its information to its partners and another where it does not. We show that cartels are extremely unstable when the informed firm communicates with the uninformed firms. However, when the informed firm does not communicate with the uninformed firms cartels can be as stable as when there are no demand fluctuations at all. |
| Keywords: | cartels; communication; stability; |
| JEL: | D82 C72 L00 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:44246&r=bec |
| By: | Becker, Sascha (University of Warwick); Hvide, Hans V (University of Bergen) |
| Abstract: | In the large literature on firm performance, economists have given little attention to entrepreneurs. We use deaths of more than 500 entrepreneurs as a source of exogenous variation, and ask whether this variation can explain shifts in firm performance. Using longitudinal data, we find large and sustained effects of entrepreneurs at all levels of the performance distribution. Entrepreneurs strongly affect firm growth patterns of both very young firms and for firms that have begun to mature. We do not find significant differences between small and larger firms, family and non-family firms, nor between firms located in urban and rural areas, but we do find stronger effects for founders with high human capital. Overall, theresults suggest that an often overlooked factor –individual entrepreneurs –plays a large role in affecting firm performance. |
| Keywords: | entrepreneurship, Örm performance, human capital. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:cge:warwcg:108&r=bec |
| By: | Giulio Bottazzi; Marco Grazzi |
| Abstract: | This paper studies the impact of size on labor cost and productivity for Italian man- ufacturing 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 ac- counted for productivity differences among firms, size still retains a positive effect on cost of labor in most of the sectors considered. |
| Keywords: | Size-wage effect; Labor productivity |
| Date: | 2013–02–04 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2013/02&r=bec |
| By: | Valerie Smeets (Department of Economics and Business, Aarhus University); Michael Waldman (Johnson Graduate School of Management, Cornell University); Frederic Warzynski (Department of Economics and Business, Aarhus University) |
| Abstract: | There is an extensive theoretical literature based on what is called the scale-of-operations effect, i.e., the idea that the return to managerial ability is higher the more resources the manager influences with his or her decisions. This idea leads to various testable predictions including that higher ability managers should supervise more subordinates, or equivalently, have a larger span of control. And although some of this theory’s predictions have been empirically investigated, there has been little systematic investigation of the theory’s predictions concerning span of control. In this paper we first extend the theoretical literature on the scale-of-operations effect to allow firms’ beliefs concerning a manager’s ability to evolve over the manager’s career, where much of our focus is the determinants of span of control. We then empirically investigate testable predictions from this theoretical analysis using a unique single firm dataset that contains detailed information concerning the reporting relationships at the firm. Our investigation provides strong support both for the model’s predictions concerning wages, wage changes, and probability of promotion, and also for the model’s predictions concerning span of control including predictions derived from the learning component of the model. Overall, our investigation supports the notion that the scale-of-operations effect and additionally learning are important determinants of the internal organization of firms including span of control. |
| Keywords: | performance, career dynamics, span of control |
| JEL: | J31 M5 |
| Date: | 2013–02–05 |
| URL: | http://d.repec.org/n?u=RePEc:aah:aarhec:2013-02&r=bec |
| By: | Walter, Sascha; Heinrichs, Simon; Walter, Achim |
| Abstract: | We investigated how and when parent hostility (degree to which a parent firm disapproves the spawning of an own spin-out) affects spin-out performance and how spin-outs can effectively react to it. Analyses of 144 technology spin-outs support our arguments that spin-outs suffer from hostility. Hostility consequences are, however, less severe if market turbulence is high or if the spin-out pursues effective network development. -- |
| Keywords: | parent-child relationship |
| JEL: | M13 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:68592&r=bec |
| By: | McKenzie, David (World Bank); Woodruff, Christopher (University of Warwick) |
| Abstract: | Business training programs are a popular policy option to try to improve the performance of enterprises around the world. The last few years have seen rapid growth in the number of evaluations of these programs in developing countries. We undertake a critical review of these studies with the goal of synthesizing the emerging lessons and understanding the limitations of the existing research and the areas in which more work is needed. We find that there is substantial heterogeneity in the length, content, and types of firms participating in the training programs evaluated. Many evaluations suffer from low statistical power, measure impacts only within a year of training, and experience problems with survey attrition and measurement of firm profits and revenues. Over these short time horizons, there are relatively modest impacts of training on survivorship of existing firms, but stronger evidence that training programs help prospective owners launch new businesses more quickly. Most studies find that existing firm owners implement some of the practices taught in training, but the magnitudes of these improvements in practices are often relatively modest. Few studies find significant impacts on profits or sales, although a couple of the studies with more statistical power have done so. Some studies have also found benefits to microfinance organizations of offering training. To date there is little evidence to help guide policymakers as to whether any impacts found come from trained firms competing away sales from other businesses versus through productivity improvements, and little evidence to guide the development of the provision of training at market prices. We conclude by summarizing some directions and key questions for future studies. |
| Keywords: | Business training; Consulting; Randomized experiments; Firm Productivity. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:cge:warwcg:115&r=bec |
| By: | Bellmann, Lutz (Institute for Employment Research (IAB), Nuremberg); Gerner, Hans-Dieter (Institute for Employment Research (IAB), Nuremberg); Hübler, Olaf (University of Hannover) |
| Abstract: | To improve their competitiveness the companies aim to increase the funds available to finance the necessary investments. In order to reduce wage costs company-specific deviations from industry-level wage contracts are concluded. Company-level pacts between the management and the works council are often preferred in comparison to agreements between employers' association and unions because the former negotiating partners are better informed about the economic situation of a company and have less goal conflicts than the latter. Moreover, these company-level pacts might reduce the "hold-up" problems which arise once specialized investment is made. Therefore, this paper investigates whether such agreements affect firm-level investment. Based on the IAB Establishment Panel Survey 2001-2010 our estimates reveal that the adoption of a company-level pact leads to a higher investment rate than in other firms driven by re-investment. However, the Great Recession has damped this positive influence. From our econometric analysis we cannot detect any increase in investment during the negotiation phase. After the expiration of a CLP, lower reinvestment and a small increase in net investment take place. Furthermore, our econometric results show that the company-level pacts' success depends on the specific measures which are agreed and on the duration of the pacts. |
| Keywords: | industrial relations, pacts for employment and competitiveness, investments |
| JEL: | J50 J52 J53 D24 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7195&r=bec |
| By: | Lange, Kelly Y.; Johnson, Jeffrey W.; Johnson, Phillip N.; Hudson, Darren; Wang, Chenggang; Gustafson, Bill |
| Abstract: | Family farm management is often transferred separately from farm ownership. This article determines the impact of variables affecting management transfer decisions. Agricultural Resource Management Survey data are used to investigate variable impacts. Results indicate operator demographics, business planning practices, and value of farm and non-farm assets impact management transfer decisions. |
| Keywords: | family farm succession, intergenerational transfer, ARMS, Agribusiness, Farm Management, Q10, Q12, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saea13:142731&r=bec |
| By: | Godart, Olivier (Kiel Institute for the World Economy); Görg, Holger (Kiel Institute for the World Economy) |
| Abstract: | Using information on more than 1000 firms in a number of emerging countries, we find quantitative evidence that suppliers of multinationals that are pressured by their customers to reduce production costs or develop new products have higher productivity growth than other firms, including other host country suppliers of multinationals. These findings provide first empirical support for a "forced linkage effect" from supplying multinational companies. Our findings hold controlling for other factors within and outside the supplier-customer relationship and when endogeneity concerns are taken into consideration. |
| Keywords: | backward linkages, multinational customers, suppliers, forced linkage, productivity spillovers |
| JEL: | F23 O12 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7173&r=bec |
| By: | Greg Kaplan; Guido Menzio |
| Abstract: | We propose a novel theory of self-fulfilling fluctuations in the labor market. A firm employing an additional worker generates positive externalities on other firms, because employed workers have more income to spend and have less time to shop for low prices than unemployed workers. We quantify these shopping externalities and show that they are sufficiently strong to create strategic complementarities in the employment decisions of different firms and to generate multiple rational expectations equilibria. Equilibria differ with respect to the agents' (rational) expectations about future unemployment. We show that negative shocks to the agents' expectations lead to fluctuations in vacancies, unemployment, labor productivity and the stock market that closely resemble those observed in the US during the Great Recession. |
| JEL: | D11 D21 D43 E32 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18777&r=bec |
| By: | Olivier N. Godart; Holger Görg |
| Abstract: | Using information on more than 1000 firms in a number of emerging countries, we find quantitative evidence that suppliers of multinationals that are pressured by their customers to reduce production costs or develop new products have higher productivity growth than other firms, including other host country suppliers of multinationals. These findings provide first empirical support for a “forced linkage effect” from supplying multinational companies. Our findings hold controlling for other factors within and outside the supplier- customer relationship and when endogeneity concerns are taken into consideration |
| Keywords: | backward linkages, multinational customers, suppliers, forced linkage |
| JEL: | F23 O12 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1822&r=bec |