nep-bec New Economics Papers
on Business Economics
Issue of 2013‒08‒23
eleven papers chosen by
Vasileios Bougioukos
Bangor University

  1. Aggregate productivity and the allocation of resources over the business cycle By Sophie Osotimehin
  2. Does State Antitrust Enforcement Drive Establishment Exit? By Robert M. Feinberg; Thomas A. Husted; Florian Szucs
  3. Export market exit, financial pressure and the crisis By Holger Görg; Marina-Eliza Spaliara
  4. The effect of firms' partial retirement policies on the labour market outcomes of their employees By Huber, Martin; Lechner, Michael; Wunsch, Conny
  5. Servitization as a Productive Strategy of a Firm - Evidence from the Forest-Based Industries By Viitamo, Esa
  6. How Do Smaller Firms Select Foreign Markets? By Musso, Fabio; Francioni, Barbara
  7. Bank-firm relationships and the survival of non-financial firms during the financial crisis 2008-2009 By Abildgren, Kim; Vølund Buchholst, Birgitte; Staghøj, Jonas
  8. Spatial Aspects of Firm-level Carbon Dioxide Emissions in Japan (Japanese) By OKUBO Toshihiro; Robert J.R. ELLIOTT; Matthew A. COLE; Ying ZHOU
  9. Price Competition in an Inflationary Environment By Duersch, Peter; Eife, Thomas
  10. Multinationals' profit response to tax differentials: Effect size and shifting channels By Heckemeyer, Jost H.; Overesch, Michael
  11. Agglomeration Matters for Trade By Enrique Moral-Benito

  1. By: Sophie Osotimehin
    Abstract: RThis paper proposes a novel decomposition of aggregate productivity to evaluate the role of resource reallocation for the cyclical dynamics of aggregate productivity. The decomposition, which is derived from the aggregation of heterogeneous firm-level production functions, accounts for changes in allocative efficiency, as well as for changes in entry and exit. This approach thereby extends Solow (1957)’s growth accounting exercise to a framework with firm heterogeneity and frictions in the allocation of resources across firms. I apply the decomposition to a comprehensive dataset of French manufacturing and service firms and find that entry and exit contribute little to the year-on-year variability of aggregate productivity. Resource reallocation across incumbent firms, however, plays an important role in the dynamics of aggregate productivity. The efficiency of resource allocation improves during downturns and tend to reduce the volatility of aggregate productivity
    Keywords: aggregate productivity, aggregate fluctuations, resource allocation, entry and exit, cleansing
    JEL: E32 O47 D24
    Date: 2013–08
  2. By: Robert M. Feinberg; Thomas A. Husted; Florian Szucs
    Abstract: Previous work has shown that state-level antitrust enforcement activity may have impacts on entry and relocation behavior by U.S. firms. Significant state-level antitrust activity may be an indicator of a perceived adverse business environment and it is found to deter establishment entry, particularly for larger firms in the retail and wholesale sectors. An obvious question is whether establishment exit is affected in a symmetric way, or whether sunk costs of market entry may lead to a smaller impact in terms of the exit decisions. We first combine US Census establishment exit panel data with data for 1998-2006 on US state-level antitrust activity and other measures of state-level business activities that may affect establishment exit. We also consider establishment exit across different broad industry types -- manufacturing, retail and wholesale -- and several firm size categories. Local business cycle factors seem to be the primary driver of exit, though there is some evidence of political and antitrust determinants as well. In another approach, we examine firm-level exit decisions and the extent to which these respond to state antitrust enforcement, with some indication of antitrust enforcement effects here as well, especially in the wholesale and retail sectors. JEL classification:
    Date: 2013
  3. By: Holger Görg; Marina-Eliza Spaliara
    Abstract: Using firm-level data for the UK, we investigate the link between firms’ financial health, borrowing ratio and export exit, paying special attention to the recent financial crisis. Our results show that deterioration in the financial position of firms has increased the hazard of export exit during the crisis. We also find that the sensitivity of export exit to changes in firms’ financial condition is higher during the crisis for those firms which face increases in loan spreads associated with the firm-specific interest rate
    Keywords: financial pressure, firm exit, financial health, exports
    JEL: F1 L2 G3
    Date: 2013–08
  4. By: Huber, Martin; Lechner, Michael; Wunsch, Conny
    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: 2013–08
  5. By: Viitamo, Esa
    Abstract: A central aspect of the industrial evolution in the advanced economies is the phenomenon called servitization. In general, the term servitization or product-service transition is used to highlight the change, where the tangible offering of a manufacturing firm is augmented with intangible services. In this paper, servitization is addressed broadly as a strategic reorientation by a manufacturing firm which entails adjustments in the firm business model as well. A useful framework to address the product-service transition is the socio-economic view of service productivity. On that basis, the paper shows how the productive strategy of the servitizing firm is linked with the business model that builds on service-dominant (S-D) logic. The resources and capabilities of the firm are central drivers in servitization. Via the empirical case study of the servitization strategies in the Finnish forest cluster, the paper extends the scope of analysis in the servitization research from the installed base -industries to the process industries. In a wider context, this paper contributes to the research collaboration between Aalto University (BIT) and Research Institute of the Finnish Economy, ETLA in the field of service research.
    Keywords: servitization, strategy, productivity, service-dominant logic, forest-based industries
    JEL: D24 L14 M11 M21
    Date: 2013–08–07
  6. By: Musso, Fabio; Francioni, Barbara
    Abstract: The purpose of this paper was to analyze the internationalization of small and medium-sized enterprises (SMEs) in relation to international market selection (IMS). To accomplish this, an investigation of the primary factors influencing SMEs’ choice when selecting international market in a systematic way was conducted. In addition we sought to understand whether there was a relationship between the systematic approach in IMS and the characteristics of SMEs. Results revealed that the majority of SMEs adopt a non-systematic IMS. However, in the case of SMEs following a systematic approach to IMS, the study pointed out that SMEs are influenced by firm-specific and host country factors, but not by entry barriers like geographic and cultural distance. In addition, results illustrated the existence of a relationship between systematic IMS and firm size.
    Keywords: International market selection, Small and medium-sized enterprises, International strategy, Systematic and non-systematic approaches
    JEL: D92 M16 M21 M31
    Date: 2012–09–25
  7. By: Abildgren, Kim; Vølund Buchholst, Birgitte; Staghøj, Jonas
    Abstract: Utilising a unique data set with annual accounts from around 37,000 Danish non-financial firms spanning almost one and a half decade, we offer microeconometric evidence on bankfirm relationships and the survival of firms during the financial crisis 2008-9. Within the framework of accounting-based credit-scoring models we find that the probability of default during the crisis was significantly higher for firms with a “weak” bank than for comparable firms with a “sound” bank– even after controlling for differences in the credit quality of firms. We discuss how to interpret these results in relation to the real effects of financial crisis. JEL Classification: E44, G21, G33
    Keywords: bank-firm relationships, financial crisis, firm survival, probability of default
    Date: 2013–02
  8. By: OKUBO Toshihiro; Robert J.R. ELLIOTT; Matthew A. COLE; Ying ZHOU
    Abstract: In this paper, we examine the spatial distribution of Japanese pollution-intensive firms. Employing spatial econometric techniques, our results show that firm-level carbon dioxide emissions are spatially correlated and spatial correlations with our dependent variable are perhaps due to demonstration or imitation effects. We also find evidence of feedback effects where the emissions of firms affect those of other firms located nearby.
    Date: 2013–08
  9. By: Duersch, Peter; Eife, Thomas
    Abstract: We study how inflation and deflation affect firms' ability to cooperate in an experimental Bertrand duopoly with differentiated products. We find that there is significantly less cooperation in the treatments with inflation and deflation compared to the no-inflation treatments. The difficulties to cooperate affect prices and welfare: Depending on the market structure, inflation and deflation lead to significantly lower (real) prices and higher welfare.
    Keywords: Bertrand Duopoly; Inflation; Experiment; Money Illusion
    Date: 2013–08–13
  10. By: Heckemeyer, Jost H.; Overesch, Michael
    Abstract: This paper provides a quantitative review of the empirical literature on profit-shifting behavior of multinational firms. We synthesize the evidence from 25 studies and find a substantial response of profit measures to international tax rate differentials. Accounting for misspecification biases by means of meta-regressions, we predict a tax semi-elasticity of subsidiary pre-tax profits of about 0.8. Moreover, we disentangle the tax response by means of financial planning from the transfer pricing and licensing channel. Our results suggest that transfer pricing and licensing are the dominant profit-shifting channel. --
    Keywords: Profit Shifting,Multinational Firm,Corporate Income Tax,Meta-Analysis
    JEL: H25 H26 H32
    Date: 2013
  11. By: Enrique Moral-Benito (Bank of Spain)
    Abstract: We use a unique administrative dataset of Spanish exporters to document the existence of exporters' geographical agglomeration by export-destination. We reveal that firms selling to countries with worse business regulations, dissimilar language and different currency tend to cluster signicantly more. We then assess the implications of exporters' geographical agglomeration for firms' behaviour and for the estimated welfare gains from trade. On the one hand, we find that exporters engage in more stable trade relationships with those countries that are the export-destinations of nearby firms. On the other, we introduce agglomeration in a model of international trade a la Melitz (2003). Using our Spanish firm-level data, we find that relative to a model without agglomeration, accounting for this phenomenon increases by 44% the elasticity of welfare with respect to fixed trade-costs.
    Date: 2013

This nep-bec issue is ©2013 by Vasileios Bougioukos. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.