nep-bec New Economics Papers
on Business Economics
Issue of 2013‒07‒15
nine papers chosen by
Vasileios Bougioukos
Bangor University

  1. Asymmetry Reversals and the Business Cycle By Roberta Distante; Ivan Petrella; Emiliano Santoro
  2. Entry and Post-Entry Dynamics in Developing Countries By Francesco Quatraro; Marco Vivarelli
  3. Entry, Exit, Firm Dynamics, and Aggregate Fluctuations By Gian Luca Clementi; Berardino Palazzo
  4. Productivity, market selection and corporate growth: comparative evidence across US and Europe By Giovanni Dosi; Daniele Moschella; Emanuele Pugliese; Federico Tamagni
  5. Business intelligence and multi-market competition By Billand, P.; Bravard, C.; Chakrabarti, S.; Sarangi, S.
  6. Time to BRIC It? – Internationalization of European Family Firms in Europe, North America and the BRIC Countries By Vivien Procher; Diemo Urbig; Christine Volkmann
  7. When to Pay More: Incentives, Culture and Status in Principal‐ Agent Interactions By Dessi, Roberta; Miquel-Florensa, Pepita
  8. Learning Capitalism the Hard Way—Evidence from Germany's Reunification By Thomas P. Triebs; Justin Tumlinson
  9. Rivalry information acquisition and disclosure By Li X.; Peeters R.J.A.P.

  1. By: Roberta Distante (Fondazione Eni Enrico Mattei); Ivan Petrella (Department of Economics, Mathematics and Statistics, Birkbeck, University of London); Emiliano Santoro (Department of Economics and Finance, Catholic University of Milan and Department of Economics, University of Copenhagen)
    Abstract: The cross-sectional dynamics of the U.S. business cycle is examined through the lens of quantile regression models. Conditioning the quantiles of firm-level growth to different measures of technological change highlights a deep connection between counter-cyclical skewness and the transmission of aggregate disturbances. Asymmetry reversals emerge as the dominant source of cyclical variation in the probability density, generating a powerful amplification of aggregate shocks to firm technology. Designing and validating heterogeneous firm business cycle models should necessarily account for this empirical finding.
    Keywords: Corporate Growth, Conditional Quantiles, Business Cycles, Asymmetry Reversals
    JEL: C21 E32
    Date: 2013–05
  2. By: Francesco Quatraro; Marco Vivarelli
    Abstract: The aim of this paper is to provide an updated survey of the "state of the art" in entrepreneurial studies, with a particular focus on developing countries (DCs). In particular, the same concept of "entrepreneurship" will be critically discussed, then moving to the institutional, macroeconomic and microeconomic conditions affecting the entry of new firms and the post-entry performance of newborn firms.
    Keywords: entrepreneurship, new firm, innovation, development
    JEL: L26 O12
    Date: 2013–06
  3. By: Gian Luca Clementi; Berardino Palazzo
    Abstract: Do firm entry and exit play a major role in shaping aggregate dynamics? Our answer is yes. Entry and exit propagate the effects of aggregate shocks. In turn, this results in greater persistence and unconditional variation of aggregate time-series. These are features of the equilibrium allocation in Hopenhayn (1992)'s model of equilibrium industry dynamics, amended to allow for investment in physical capital and aggregate fluctuations. In the aftermath of a positive productivity shock, the number of entrants increases. The new firms are smaller and less productive than the incumbents, as in the data. As the common productivity component reverts to its unconditional mean, the new entrants that survive become more productive over time, keeping aggregate efficiency higher than in a scenario without entry or exit.
    JEL: D92 E23 E32 L11
    Date: 2013–07
  4. By: Giovanni Dosi; Daniele Moschella; Emanuele Pugliese; Federico Tamagni
    Abstract: This paper presents a broad set of empirical regularities about selection and market shares reallocation in manufacturing industries of France, Germany, UK and USA. We first disentangle the contribution to industry-level productivity growth of within-firm productivity changes and between-firms reallocation of shares. The evidence corroborates that within-firm learning prevails over competitive selection. Second, we address the strength of reallocation by exploring if and to what extent firm growth rates are shaped by relative productivity levels in deviation from industry average and by the over time variation of productivities themselves. The econometric analysis accounts for both the dynamic dimension of the selection process and idiosyncratic firm-specific factors. We find that changes, rather than relative levels, are the dominant productivity-related determinant of relative growth rates.
    Keywords: firms heterogeneity, sectoral productivity decomposition, corporate growth, productivity, market selection, firm-industry dynamics
    Date: 2013–07–08
  5. By: Billand, P.; Bravard, C.; Chakrabarti, S.; Sarangi, S.
    Abstract: We consider a multimarket framework where a set of firms compete on two oligopolistic markets. The cost of production of each firm allows for spillovers accross markets, ensuring that output decisions for both markets have to be made jointly. Prior to competing in these markets, firms can establish links gathering business intelligence about other firms. These links have two effects. First, the quality of the good produced by the firm which forms the link increases. Second, the quality of the good of the firm which receives the link decreases. We characterize the business intelligence equilibrium networks and networks that maximize social welfare under the most interesting scenario of diseconomies of scope. We that due to externalities, the equilibrium networks may be over-connected relative to socially optimal networks creating a role for policy intervention. We also find that in some situations firms may refrain from gathering information, even if it is costlesss. Moreover, even though intelligence gathering leads to increased product quality, there exist situations where it is detrimental to both consumer welfare and social welfare.
    JEL: C70 L13 L20
    Date: 2013
  6. By: Vivien Procher; Diemo Urbig; Christine Volkmann
    Abstract: For a sample of 1243 European companies, we analyse the link between firm type and foreign direct investment (FDI) locations. We find substantial empirical evidence that being a family firm does not only affect the overall propensity for FDI but that this effect is also specific to target regions. Overall, family firms invest more than managerial-led firms, particularly in Europe and North America. Furthermore the BRIC countries Brazil, Russia, India and China do not constitute a homogenous attractiveness cluster for FDI.
    Keywords: Foreign direct investment; family firms; BRIC
    JEL: D21 F23 L22
    Date: 2013–05
  7. By: Dessi, Roberta (IDEI, Toulouse School of Economics); Miquel-Florensa, Pepita (Toulouse School of Economics)
    Abstract: We study the role of status in an experimental Principal-Agent game.Status is awarded to subjects based on either talent or luck. In each randomly matched principal-agent pair, the principal chooses the agent's status-contingent piece rate for a task in which talent matters for performance (an IQ test). We perform the experiment in Cambridge (UK) and in HCMV (Vietnam). We find that in Cambridge piece rate others are significantly higher for high-status agents (only) when status signals talent. However, these higher offers are not payoff-maximizing for the principals.In contrast, Vietnam piece rate offers are significantly higher for high-status agents (only) when status is determined by luck. We explore possible explanations, and the implications for status and incentives.
    Keywords: , , incentives, status, identity, piece rate, principal-agent, signaling, culture.
    Date: 2013–05
  8. By: Thomas P. Triebs; Justin Tumlinson
    Abstract: Communism in East Germany sought to dampen the effect of market forces on firm productivity for nearly 40 years. How did East German firms respond to the free market after being thrust into it in 1990? We use a formal learning model and German business survey data to analyze the lasting impact of this far-reaching treatment on the way firms in former East Germany predicted their own productivity relative to firms in former West Germany during the two decades since Reunification. We find in confirmation of our formal model's predictions, that Eastern firms forecast productivity less accurately, particularly in dynamic and uncertain markets, but that the gap gradually closed over 12 to 13 years. Second, by analyzing the direction of firm level errors in conjunction with contemporaneous market signals we find that, in the years immediately following Reunification, Eastern firms estimate the market's role as generally less potent than Western firm do, an observation consistent with overweighting experiences from the communist era; however, over roughly 14 years both converge to the same (incorrect) overestimate of the market's role on their productivity.
    JEL: D21 D22 D84 F15 L2 N24 N64 Z1
    Date: 2013–07
  9. By: Li X.; Peeters R.J.A.P. (GSBE)
    Abstract: In the recent past there have been numerous scandals around bad practices in the food industry. Although it can be easily rationalized why these bad practices have not been reported by the inflictors themselves, it is more difficult to understand why the non-inflicting competitors did not report their rivals conspicuous acts. In this paper we study these competitors incentives to acquire and to disclose information on the quality of their rivals products and how regulatory intervention may enhance information disclosure. Our model involves two firms that compete in prices within a differentiated product market, where the quality of one of the firms is publicly known while that of the other firm is unknown. Before the firms set their prices, the former firm has the possibility to acquire information on the quality of the latter firms product, and, if decided to do so, subsequently, the possibility to credibly reveal this information to the public. We find that low quality levels can be disclosed in a substitute market, but should not be expected to be disclosed in a complement market. Policies that mandate acquisition or disclosure may enhance disclosure of low quality levels, but fail to be welfare enhancing.
    Keywords: Market Structure and Pricing: Oligopoly and Other Forms of Market Imperfection; Information and Product Quality; Standardization and Compatibility; Enterprise Policy;
    JEL: L15 L53 D43
    Date: 2013

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