nep-bec New Economics Papers
on Business Economics
Issue of 2013‒08‒10
ten papers chosen by
Vasileios Bougioukos
Bangor University

  1. Subsidies, Shadow of Death and Productivity By Koski, Heli; Pajarinen, Mika
  2. The fight against cartels: a transatlantic perspective By Emilie Dargaud; Andrea Mantovani; Carlo Reggiani
  3. The Family Business in Collectivist Societies: Traits and Implications By El Fasiki, Hamza
  4. The effect of the enterprise risk management implementation on the firm value of European companies By Giorgio Stefano Bertinetti; Elisa Cavezzali; Gloria Gardenal
  5. Disorganizing Organizational Culture: Comment on the Individual and Family Factors By El Fasiki, Hamza
  6. Feedback equilibria in a dynamic renewable resource oligopoly: pre-emption, voracity and exhaustion By Luca Lambertini; Andrea Mantovani
  7. The Effect of Firms' Partial Retirement Policies on the Labour Market Outcomes of Their Employees By Huber, Martin; Lechner, Michael; Wunsch, Conny
  8. Take the Money and Run: The Business Enterprise in the Age of Money Manager Capitalism By Jo, Tae-Hee; Henry, John F.
  9. Decision time and steps of reasoning in a competitive market entry game By Florian Lindner
  10. An Evolutionary Game for the Issues of Social Investment, Environmental Compliance and Consumer Boycott By André Barreira da Silva Rocha

  1. By: Koski, Heli; Pajarinen, Mika
    Abstract: Our panel data from over 10,000 Finnish firms during the years 2003-2010 sheds light on the effect of different business subsidies on firm productivity performance and on the relationship between firms’ lagged labor productivity and market exit. We find that not any of the subsidy types have statistically significant short-term or longer term impacts on the firms’ productivity performance. It seems that particularly employment and investment subsidies tend to be allocated to the relatively less efficient companies. We further observe that a decline in the firm’s lagged labor productivity levels are clearly more weakly related to the subsidized firms’ exit than to the exit of firms that have not received any subsidies. Our empirical findings thus hint that the allocation of subsidies to the relatively inefficient firms increases their liquidity making their market exit less likely than it would be otherwise. In other words, our data indicate that subsidy allocation weakens the shadow of death phenomenon observed in the previous empirical studies and hinders the process of creative destruction in the economy.
    Keywords: productivity, business subsidies, firm exit, enterprise policy, technology policy
    JEL: D24 J23 L10 L53 O25
    Date: 2013–08–05
  2. By: Emilie Dargaud (University of Lyon & CNRS, GATE); Andrea Mantovani (University of Bologna & IEB); Carlo Reggiani (University of Manchester)
    Abstract: The fight against cartels is a priority for antitrust authorities on both sides of the Atlantic. What differs between the EU and the US is not the basic toolkit for achieving deterrence, but to whom it is targeted. In the EU, pecuniary sanctions against the firm are the only instruments available to the Commission, while in the US criminal sanctions are also widely employed. The aim of this paper is to compare two different types of fines levied on managerial firms when they collude. We consider a profit based fine as opposed to a delegation based fine, with the latter targeting the manager in a more direct way. Under the assumption of revenue equivalence, we find that the delegation based fine, although distortive, is more effective in deterring cartels than the profit based one. When evaluating social welfare, a trade-off between deterrence and output distortion can arise. However, if the antitrust authority focuses on consumer surplus, then the delegation based fine is to be preferred.
    Keywords: Cartel policy, managerial firms, collusion
    JEL: K21 L44 K42 L21
    Date: 2013
  3. By: El Fasiki, Hamza
    Abstract: The way a family business functions is greatly influenced by the structure of the society it originates from. A wide range of literature has recently attempted to emphasise that it is, therefore, not possible to create global family business theories without taking into consideration the remarkable differences that cultural and traditional context can make. Our attention is drawn to the role that collectivism plays in influencing family culture and the way in which it manifests in entrepreneurial activity throughout family generations. Collectivist societies and the family culture experienced by its individuals can have an important influence on the family business and the entrepreneurship it fosters. The term “collectivist society” describes how individuals often behave while following imposed sets of social patterns. On a smaller scale the same paradigm applies to family businesses where the family and the business life cycles complete each other. Hamza El Fasiki, Head of Research and Studies at the Moroccan Center for Innovation and Social Entrepreneurship, describes the impact of the collectivist society on the family business paradigm and explores how organisational and family culture become one, and the power hierarchy that ensures.
    Keywords: Family Business, Family Culture, Collectivism, Organisational Culture, Culture
    JEL: A39 M0 Z10 Z19
    Date: 2013–06
  4. By: Giorgio Stefano Bertinetti (Università Ca' Foscari Venice); Elisa Cavezzali (Università Ca' Foscari Venice); Gloria Gardenal (Università Ca' Foscari Venice)
    Abstract: We aim to investigate the impact of the adoption of an Enterprise Risk Management (ERM) system on the enterprise value and to discover which are the determinants of this choice. Several economic actors have decided to face the current economic and financial complexity shifting from a Traditional silo-based Risk Management approach (TRM) to a more comprehensive one, the so called Enterprise Risk Management (ERM). Some academics have tried to investigate the effects of the ERM implementation on firm value, mainly focusing on the financial industry. The results are still controversial. Moreover, there is no empirical evidence about the adoption of ERM programs among non-financial companies. The aim of our study is double: first, we try to understand if the ERM implementation affects firm value on a sample of 200 European companies, belonging to both financial and non-financial industries; second, we test which are the determinants of the adoption of an ERM system. We do this performing a fixed effects panel regression analysis (goal 1) and a fixed effects logistic analysis (goal 2). We find a positive statistically significant relation between the ERM adoption and firm value. As for the probability that a firm engages in an ERM protocol, we find that size, the company beta and profitability (ROA) are the statistically significant determinants.
    Keywords: traditional risk management, enterprise risk management, industry, firm val
    JEL: G32 L22 L25
    Date: 2013–08
  5. By: El Fasiki, Hamza
    Abstract: Defining culture in relation to organizational culture has also focused on the operation level of culture. This latter as discussed by Maurice Thévenet (1993) concludes that culture is a collective phenomenon that concerns an enterprise as a human organization. By this collective point of assemblage, and in this measure, I intend to present the framework whereby entrepreneurial activities in collectivist cultures are constructed via two non-identical cultures: individual culture and family culture. I am concerned with questions like: What is the divergent line between the cultural beings and the organizational culture? How do individual and family cultures disorganize the organizational culture? What is their addition?
    Keywords: Organizational Culture, Collectivism, Disorganizing, Culture, Family Culture, Family Business, Inidividual Culture
    JEL: A3 Z1 Z19
    Date: 2013–05–05
  6. By: Luca Lambertini (University of Bologna & ENCORE); Andrea Mantovani (University of Bologna & IEB)
    Abstract: We extend Fujiwara’s (2008) model to describe a differential oligopoly game of resource extraction under static, linear feedback and nonlinear feedback strategies, generalising his result that steady state feedback outputs are lower than monopoly and static oligopoly equilibrium outputs for any number of firms. Additionally, we show that (i) feedback rules entail resource exhaustion for a finite number of firms; and (ii) feedback strategies are more aggressive than static ones as long as the resource stock is large enough, in accordance with the acquired view based on the traditional pre-emption argument associated with feedback information.
    Keywords: Dynamic oligopoly, renewable resources, feedback strategies
    JEL: C73 L13 Q2
    Date: 2013
  7. By: Huber, Martin (University of St. Gallen); Lechner, Michael (University of St. Gallen); Wunsch, Conny (VU University Amsterdam)
    Abstract: In this paper, we assess the impact of firms introducing part-time work schemes for gradual labour market exit of elderly workers on their employees' labour market outcomes. The analysis is based on unique linked employer-employee data that combine high-quality survey and administrative data. Our results suggest that partial or gradual retirement options offered by firms are an important tool to alleviate the negative effects of low labour market attachment of elderly workers in ageing societies. When combined with financial incentives to hire unemployed or young jobseekers as replacement, they seem to be particularly beneficial, especially when labour market conditions are difficult. Under such circumstances, they can even have positive spill-over effects on younger workers. Firms should thus be encouraged to offer such schemes.
    Keywords: part-time work, elderly employees, treatment effects, matching
    JEL: J14 J26 C21
    Date: 2013–07
  8. By: Jo, Tae-Hee; Henry, John F.
    Abstract: Most heterodox theories of the business enterprise base themselves on the Veblenian going concern in which managers pursue the long-run survival and growth of the enterprise, whereas absentee owners are occupied with short-run financial interests. Since Veblen’s era, the capitalist social provisioning process has evolved toward money manager capitalism in a dialectical fashion. At the heart of the transformation are changes in the business enterprise. In this paper, we make a threefold argument. First, while the Veblenian account of a going concern still holds true for many enterprises, more and more of the economy is being directed toward financial concerns. Second, as a consequence, the social provisioning process becomes more unstable and people’s welfare becomes more vulnerable. Third, the concept of a going concern is therefore to be modified in order to put the business enterprise in the context of money manager capitalism.
    Keywords: Thorstein B. Veblen, Hyman P. Minsky, Going Concern, Money Manager Capitalism, Mergers and Acquisitions, Social Provisioning Process
    JEL: B5 D20 G34
    Date: 2013–08–01
  9. By: Florian Lindner
    Abstract: Entry decisions in market entry games usually depend on the belief about how many others are entering the market, the belief about the own rank in a real effort task, and subjects' risk preferences. In this paper I am able to replicate these basic results and examine two further dimensions: (i) the level of strategic sophistication, which has a positive impact on entry decisions, and (ii) the impact of time pressure, which has a (partly) negative influence on entry rates. Furthermore, when ranks are determined using a real effort task, differences in entry rates are explainable by higher competitiveness of males. Additionally, I show that individual characteristics are more important for the entry decision in more competitive environments.
    Keywords: Market entry game, Time pressure, Level-k reasoning, Risk, Competitiveness, Experiment
    JEL: C72 C91 D81
    Date: 2013–07
  10. By: André Barreira da Silva Rocha
    Abstract: I propose an evolutionary game model to study competition among a large number of firms, in which I take into account the issues of social responsibility, government monitoring of environmental compliance and consumer boycott. A large number of firms sell their homogeneous good in an almost perfect competitive market, where consumers have preferences for socially responsible firms. Firms may incur additional costs and carry out social investment and/or environmental investment. Each time interval, a firm may be called to play a competition-stage game, in which it tries to sell its good, or an audit-stage game, in which inspectors audit its degree of environmental compliance.
    Keywords: Replicator dynamics, social responsibility, boycott, investment, regulation.
    JEL: C73 M14 L51
    Date: 2013–07

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