nep-bec New Economics Papers
on Business Economics
Issue of 2013‒06‒09
eleven papers chosen by
Vasileios Bougioukos
Bangor University

  1. Foreign Investors as Change Agents: The Swedish Firm Experience By Fogel, Kathy S.; Lee, Kevin K.; Lee, Wayne Y.; Palmberg, Johanna
  2. What drives firm growth? The role of demand and TFP shocks By Fabiano Schivardi; Andrea Pozzi
  3. Alliance Capability, Governance Mechanisms And Stakeholder Management In Complex Settings By Basant, Rakesh; Rai, Rajnish
  4. Innovative start-up patenting: a new approach towards identification and determinants By Tina Wolf
  5. Firm-level Hiring Difficulties: Persistence, Business Cycle and Local Labour Market Influences By Richard Fabling; Maré, David C
  6. Taxes, tax administrative burdens and new firm formation By Braunerhjelm, Pontus; Eklund, Johan E.
  7. Trade, Inventories, and International Business Cycles By Virgiliu Midrigan; Joe Kaboski; George Alessandria
  8. Can intangible investment explain the UK productivity puzzle? By Haskel, J; Goodridge, P; Wallis, G
  9. Internationalization of the Japanese Manufacturing Industry and the Structure of the Global Value Chain (Japanese) By ITO Koji
  10. Industry - and firm-specific factors of innovation novelty By Natália Barbosa; Ana Paula Faria; Vasco Eiriz
  11. Homeownership and Entrepreneurship: The Role of Commitment and Mortgage Debt By Bracke, Philippe; Hilber, Christian; Silva, Olmo

  1. By: Fogel, Kathy S. (University of Arkansas); Lee, Kevin K. (California State University); Lee, Wayne Y. (University of Arkansas); Palmberg, Johanna (Entrepreneurship Forum, CESIS, KTH)
    Abstract: Institutional theory suggests that informal institutions effectively constrain human behavior. Culturally embedded norms and values align corporate governance with socially acceptable outcomes. We argue that active foreign investors can act as agents of change in corporate governance. Investigating changes in ownership and control of Swedish firms, we find that active foreign investors’ participation in conjunction with a reduction of control by the largest domestic shareholder, improves firm performance through more efficient capital utilization and labor productivity. Firms move away from a Swedish stakeholder orientation toward an Anglo-American shareholder wealth maximization focus.
    Keywords: Foreign Direct Investors; Informal Institution; Business Culture
    JEL: E02 G32 G34 G38 M14
    Date: 2013–05–24
  2. By: Fabiano Schivardi (University of Cagliari); Andrea Pozzi (Einaudi Institute for Economics and Fina)
    Abstract: We disentangle the contribution of unobserved heterogeneity in idiosyncratic demand and productivity to firm growth. We use a model of monopolistic competition with Cobb-Douglas production and a dataset of Italian manufacturing firms containing unique information on firm-level prices to reach three main results. First, demand is at least as important for firm growth as productivity. Second, firms' responses to shocks are lower than those predicted by our frictionless model, suggesting the existence of adjustment frictions. Finally, the deviation is more substantial for TFP shocks. We provide direct evidence that sluggish price adjustment influences responses to shocks, magnifying the effect of market appeal and dampening that of TFP. Moreover, organizational rigidity within the firm also contributes to reducing the response to TFP shocks, while it has no effects on that to demand shocks. These findings emphasize the importance of considering both dimensions of unobserved heterogeneity. They also imply that it is more difficult to fully adjust to TFP shocks.
    Date: 2012
  3. By: Basant, Rakesh; Rai, Rajnish
    Abstract: In today’s business environment, inter-firm alliances of simultaneous cooperation and competition (IASCC) have become very important for enhancement of internal resources as well as market shares of firms. Evidence suggests that majority of the alliances today occur between competitors or within the same industry. Given the increasing importance and complexity of IASCC, issues of stakeholder management and governance structures in such alliances need to be more clearly understood. Using primary data collected from Indian firms in different sectors, this paper explores the antecedents of governance mechanisms in IASCC from a stakeholder perspective by viewing alliance partners as stakeholders. It is argued that alliance capabilities are important determinants of governance structures. Moreover, the role of these capabilities is moderated by the strategic context of the IASCC in determining the nature of governance structures.
  4. By: Tina Wolf (Friedrich Schiller University Jena, DFG RTG 1411 The Economics of Innovative Change)
    Abstract: There already exists broad literature investigating small and innovative firms in many respects. However, there have been few attempts to assess this group of firms' propensity to patent or its patenting activities. This paper intends to fill that gap. By applying a new approach to account for young and innovative companies' patents, this paper avoids an undercounting of small firm patenting, which has been a feature of most of the earlier studies. A data set is used that comprises information on R&D, capital stock, state promotion etc for 534 Thuringian firms in their first three business years. The results of the zero-inflated negative binomial regression analysis suggest that patenting is an activity of science-oriented, cooperative young firms that are conducting R&D even before the firm has been launched.
    Keywords: entrepreneurship, technological innovation, patenting, firm performance, research and development
    JEL: L25 L26 Q55
    Date: 2013–05–27
  5. By: Richard Fabling (Motu Economic and Public Policy Research); Maré, David C (Motu Economic and Public Policy Research)
    Abstract: We examine the correlates of reported hiring difficulties at the firm level using linked employer-employee and panel survey data over 2005-2011, focussing on the relative influence of firm-level characteristics, persistence, the business cycle and local labour market liquidity. At both the aggregate and the firm level, hiring difficulties eased after the onset of the Global Financial Crisis. Even in the presence of large cyclical changes in demand and labour market conditions, firm-level persistence is a dominant feature of the data, with one- and two-year lags of reported hiring difficulties both positively related to current difficulties. Firms paying higher wages are more likely to report difficulties when trying to hire skilled workers, while firms with more long tenure workers are less likely to report any difficulty hiring. Local labour market conditions appear unrelated to reported hiring difficulties.
    Keywords: hiring difficulties, hard-to-fill vacancies, local labour market, Global Financial Crisis
    JEL: J23 J63 M51
    Date: 2013–05
  6. By: Braunerhjelm, Pontus (Entrepreneurship Forum, CESIS, KTH); Eklund, Johan E. (Entrepreneurship Forum, JIBS)
    Abstract: This paper examines the tax administrative burden and its effect on new firm formation. It is well recognized that entrepreneurship and new firm formation are critical factors in determining economic growth and development. New firm entry into the marketplace enhances welfare in two distinct ways: 1) by promoting innovation, productivity and economic growth and 2) by increasing competition, which lowers prices and expands output. It is also well documented that barriers to entry reduce the likelihood that new firms will enter various sectors. We argue that the burden imposed by tax codes and tax compliance constitutes a barrier to entry that has been neglected in the previous literature. We use data from the World Bank to measure the administrative burden that the complexity of tax policy imposes on new firm. Additionally, we use a measure of new firm formation—entry density. Our data cover 118 countries over a period of six years. We find that the entry rate is significantly reduced by the tax administrative burden and that this effect is unrelated to general taxes on corporate profits and is robust to the inclusion of several important control variables.
    Keywords: tax administrative burden; entry; entrepreneurship; new firm formation; regulations; tax policy
    JEL: D22 H20 K20 L26 L51
    Date: 2013–05–27
  7. By: Virgiliu Midrigan (New York University); Joe Kaboski (University of Notre Dame); George Alessandria (Federal Reserve Bank of Philadelphia)
    Abstract: The large, persistent fluctuations in international trade that can not be explained in standard models by either changes in expenditures or relative prices are often attributed to trade wedges. We show that these trade wedges can reflect the decisions of importers to change their inventory holdings. We find that a two country model of international business cycles with an inventory management decision can generate trade flows and wedges consistent with the data. We find that modelling trade in this way alters the international transmission of business cycles. Specifically, real net exports become less procyclical and consumption becomes less correlated across countries.
    Date: 2012
  8. By: Haskel, J; Goodridge, P; Wallis, G
    Date: 2013–05–24
  9. By: ITO Koji
    Abstract: As a result of globalization in the world economy, firms with different nationalities are now engaging in the production of goods or services. The potential of a firm's growth driven from participation in the global value chain (GVC) has long been pointed out although figuring out firms' GVC participation is still challenging due to a lack of information of inter-firm trade.<br />Thus, this paper extracts matched data of firms from the database of Tokyo Shoko Research, LTD. (TSR) including the "TSR firm relationship file" and the "TSR firm group information file," and the "Basic Survey of Japanese Business Structure and Activities" from the Ministry of Economy, Trade and Industry, and classifies the data into "international firms" (those which export and/or have foreign affiliates), "GVC participation firms" (those which directly deliver their goods or services to international firms), and other "GVC non participation firms" to compare the characteristics.<br />This paper shows that international firms, located at the top of the GVC structure, are the largest and have the best performance in terms of sales, followed by GVC participation firms, implying that participation in GVC and climbing up in the GVC structure enhance the possibility of firms' growth.
    Date: 2013–05
  10. By: Natália Barbosa (Universidade do Minho - NIPE); Ana Paula Faria (Universidade do Minho - NIPE); Vasco Eiriz (Universidade do Minho - Departamento de Gestão)
    Abstract: This paper investigates the underlying factors that might shape the firm’s choices with respect to degrees of innovation novelty. Using a sample of 2983 firms observed under the Portuguese Community Innovation Survey, we assess the relative relevance of a set of firm- and industry-specific factors in explaining firms’ choices about incremental or radical innovation. The results indicate that both the firm’s idiosyncratic historical factors giving rise to heterogeneous R&D capabilities and the industry context have power to shape the firm’s innovation choices, even though firm-specific factors appear to be more powerful. The estimated impacts on firm’s innovation novelty are, nonetheless, significantly moderated by the type of firm and industry.
    Keywords: Radical and incremental innovation, competitive environment, R&D capabilities.
    JEL: L21 L10
    Date: 2013
  11. By: Bracke, Philippe (London School of Economics); Hilber, Christian (London School of Economics); Silva, Olmo (London School of Economics)
    Abstract: We study the link between homeownership and entrepreneurship using a model of occupational choice and housing tenure where homeowners commit a fixed budget to mortgage payments. Our model predicts that: (i) mortgage commitments, by amplifying risk aversion, diminish the likelihood that homeowners start a business; (ii) the negative link between homeownership and entrepreneurship is increasing in mortgage debt; and (iii) the negative relation is more pronounced for entrepreneurs in risky sectors. Exploiting the longitudinal dimension of the British Household Panel Survey to control for unobservables, we test and confirm these predictions. Leveraged home-buyers are 30% less likely to become entrepreneurs.
    Keywords: entrepreneurship, homeownership, commitment
    JEL: L26 D14 G11 R21
    Date: 2013–05

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