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on Business Economics |
| By: | Aysýt Tansel (Middle East Technical University, Turkey); Þaziye Gazioðlu (Middle East Technical University, Turkey) |
| Abstract: | This paper investigates the job satisfaction in relation to managerial attitudes towards employees and firm size using the linked employer-employee survey results in Britain.We first investigate the managementemployee relationships and the firm size using maximum likelihood probit estimation . Next various measues of job satisfaction are related to the management-employee relations via maximum likelihood ordered probit estimates. Four measures of job satisfaction that have not been used often are considered. They are satisfaction with influence over job; satisfaction with amount of pay; satisfaction with sense of achievement and satisfaction with respect from supervisors. Main findings indicate that managementemployee relationships are less satisfactory in the large firms than in the small firms. Job satisfaction levels are lower in large firms. Less satisfactory management-employee relationships in the large firms may be a major source of the observed lower level of job satisfaction in them. These results have important policy implications from the point of view of the firm management while achieving the aims of their organizations in particular in the large firms in the area of management-employee relationships. Improving the management-employee relations in large firms will increase employee satisfaction in many respects as well as increase productivity and reduce turnover. The nature of the management-employee relations with firm size and job satisfaction has not been investigated before. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:tek:wpaper:2013/5&r=bec |
| By: | Anaïs HAMELIN (LaRGE Research Center, Université de Strasbourg) |
| Abstract: | This paper explores whether the benefits and costs of affiliation with a business group (BG) are influenced by firm and BG size. We explore empirically this issue using a unique data set on French small businesses ownership. Our results show that affiliation with a BG has a positive influence on SMEs performance. This result holds when we account for firm size, BG size and endogeneity issues. Moreover, we observe that the benefits of BG affiliation diminish with firm size, which is consistent with the fact that the benefits of BG affiliation increase with information imperfection. Finally, affiliation with a small BG seems more beneficial than affiliation with a large BG. This paper contribute to the literature by showing that affiliation with a BG allows overcoming market imperfections related to organization size. |
| Keywords: | Business group, SME, Performance, Size. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:lar:wpaper:2013-10&r=bec |
| By: | Kato, Takao; Kauhanen, Antti |
| Abstract: | Much of the empirical literature on PRP (Performance Related Pay) focuses on a question of whether the firm can increase firm performance in general and enterprise productivity in particular by introducing PRP and if so, how much. However, not all PRP programs are created equal and PRP programs vary significantly in a variety of attributes. This paper provides novel and rigorous evidence on the productivity effect of varying attributes of PRP and shows that the details of PRP indeed matter. In so doing we exploit the panel nature of our Finnish Linked Employer-Employee Data on the details of PRP. We first establish that the omitted variable bias is serious, makes the cross-sectional estimates on the productivity effect of the details of PRP biased upward substantially. Relying on the fixed effect estimates that account for such bias, we find: (i) group incentive PRP is more potent in boosting enterprise productivity than individual incentive PRP; (ii) group incentive PRP with profitability as a performance measure is especially powerful in raising firm productivity; (iii) when a narrow measure (such as cost reduction) is already used, adding another narrow measure (such as quality improvement) yields no additional productivity gain; and (iv) PRP with greater Power of Incentive (the share of PRP in total compensation) results in greater productivity gains yet returns to Power of Incentive diminishes very slowly. |
| JEL: | M52 J33 J24 J53 O53 |
| Date: | 2013–09–26 |
| URL: | http://d.repec.org/n?u=RePEc:rif:wpaper:21&r=bec |
| By: | Abigail S. Hornstein (Department of Economics, Wesleyan University) |
| Abstract: | This paper exploits the substantial variation in market institutions across provinces in China to examine the impact of institutional quality on foreign listing. Firms that list on the U.S. and U.K. exchanges are more likely to come from better regulated provinces and tend to be at the top of a corporate pyramid. However, though the impact on firm performance of market institutions and pyramidal affiliations persists briefly post-listing with firms recording lower EPS and higher raw returns in the first year, it does not help predict whether firms remain listed abroad in 2012. Thus, we conclude that headquarters’ market institutions shape a firm through time of listing and have diminished influence over time. |
| Keywords: | China, IPO, foreign listing, institutions, pyramid |
| JEL: | G32 G15 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:wes:weswpa:2013-006&r=bec |
| By: | Sangyub Ryu (International University of University); John Ronquillo (DePaul University); Cora Terry (The University of Georgia) |
| Abstract: | Since the New Public Management is emphasized, the practices of the business sector have been introduced to the public sector without careful assessment. One of the examples is the adoption of pay-for-performance across state governments. Although theories of pay-for-performance may be compelling, scholars have found failures of payfor-performance in the public sector. This study applies a diffusion theory to understand why state governments have adopted pay-for-performance although its effectiveness was not confirmed. Findings show that state governments tend to adopt pay-for-performance as their neighboring states have previously adopted it, but the marginal probability of adoption decreases as more neighbors have adopted pay-for-performance. |
| Keywords: | pay-for-performance, policy diffusion |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:iuj:wpaper:ems_2013_17&r=bec |
| By: | Lucie Bottega (Toulouse School of Economics); Jenny De Freitas (Universitat de les Illes Balears) |
| Abstract: | In a Bertrand duopoly model, we study firms’ eco-labeling behavior when certification process imperfectly signals environmental product quality to consumers. The test is noisy in the sense that brown products may be labeled while green products may not. We study how strategic interaction shapes firms’ incentives to get certified, equilibrium demand, prices and social welfare. We find that the eco-labeling policy is welfare enhancing for all parameter values. Nevertheless, the separating testing equilibrium may be too costly to sustain when the green firm probability to pass the test is small. Moreover, if the certification technology is soft, meaning that both brown and green units are awarded the label with high probability, it would be easier to sustain a separating equilibrium. This is a consequence of price strategic interaction between firms that gives firms incentives to coordinate on a separating equilibrium. |
| Keywords: | Imperfect Certification, Eco-label, Duopoly, Welfare Analysis, Environmental Quality, Credence Attribute |
| JEL: | C72 D21 D60 D82 L15 Q50 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ubi:deawps:62&r=bec |
| By: | Andrea Caggese (Pompeu Fabra University) |
| Abstract: | This paper develops the model of an industry with heterogeneous firms, and studies the effect of financing frictions and bankruptcy risk on innovation and aggregate productivity growth. The model has two main features: i) the technology of firms gradually becomes obsolete. Firms can counter this process by innovating, but the innovation outcome is risky. ii) Financial frictions cause the inefficient default of financially fragile firms, deter entry, and reduce competitive forces in the industry. I calibrate and solve the model and simulate several industries, and show that financing frictions have two distinct effects on innovation: a "direct effect", for firms that cannot innovate because of lack internal funds to invest, and an "indirect effect", where the changes in competition and profitability change also the incentives to innovate. Simulation results first show that, for realistic parameter values, the indirect effect of financing frictions is much more important than the direct effect in determining the innovation decisions. Second, they show that "Safe innovation" (where firms invest to upgrade their technology and are certain to increase their productivity) is increased by the presence of financing frictions, because the reduction in competition increases the return on innovation. Conversely "Risky innovation" (where firms invest to improve their productivity, but with some probability fail to do so and end up reducing their productivity instead), is discouraged by financing frictions. This happens because the reduction in competition implies that firms remain profitable for a longer time and therefore they wait longer before attempting a risky innovation process. I test these predictions and their implications for productivity growth on a sample of Italian manufacturing firms, and I find that the life cycle and innovation decisions of firms are fully consistent with the model with risky innovation. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed013:300&r=bec |
| By: | FERRAGINA, Anna Maria (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy) |
| Abstract: | This report summarizes the findings of a research project using firm level data on Italian and Turkish manufacturing industries. In this project we study the dynamics of firm survival and growth, and the spillover effects from foreign-owned to domestic firms. First, we investigate the differences in survival patterns of foreign-owned and domestic firms and test the hypothesis that foreign multinational enterprises (FMNEs) display “foot-loose” behavior. Secondly, we analyse the effects of FDI on the survival and growth prospects of domestic firms by disentangling horizontal and vertical spillovers. We use hazard models for the econometric analysis of firm survival and the system-GMM and Heckman selection models for the analysis of firm (employment) growth. In the case of Italy, a comparison of survival rates of domestic and foreign firms shows that foreign firms are more likely to survive than domestic firms, although the survival rates of foreign firms are not much different than those of Italian multinational firms. To check for a more general applicability of this preliminary finding, we estimate the hazard functions for the domestic and foreign firms, controlling for a number of sector-specific and firm-specific characteristics. The results reveal that foreign firms are more “foot-loose” compared to their domestic counterparts while Italian multinationals exhibit lower hazard rates with respect to both domestic non-multinational firms and to foreign multinationals. Besides, the foreign firms’ likelihood of exit compared to domestic firms is higher in sectors with low technology- and knowledge-intensity. In the Turkish case, the simple comparison of survival rates also highlights that foreign firms are more likely to survive than Turkish firms, although the survival rates of foreign firms are not different from those of large domestic firms. Since foreign firms usually start with a larger size, use more capital-intensive technologies, survival rates may reflect the impact of entry characteristics. The hazard function estimates reveal that, when we control for sector-specific variables, foreign firms still have higher survival probabilities, but once firm-specific variables are included in the hazard function model, they appear more “foot-loose” for the 1983-2001 period. Foreign firms are more likely to survive than the domestic firms in the 2003-2009 period even after firm-specific variables are taken into account, but the inclusion of firm-specific variables reduces the impact of foreign ownership on the likelihood of survival considerably. These results for Italy and Turkey indicate that foreign ownership has not necessarily a positive impact on firm survival. Conversely, there is evidence that multinational experience matters for survival because multinational firms have larger size and may employ more capital-intensive technologies thanks to their superior financial strength and experience in other markets. Other firm-level characteristics (size, skill level, etc) are also crucial for survival. The exit behavior of foreign firms is also quite related to the technological environment due to the role played by opportunity costs, which are more relevant in low-tech industries, and by sunk investments costs, which (on average) are lower in more traditional sectors. The mixed results for Turkey across the two periods considered also highlight the importance of the institutional setting for firm survival and growth. Turkey experienced two different policy and growth regimes in the 1990s and 2000s. The 1990s, which is labeled by some researchers as the “lost decade”, is characterized by extreme uncertainty and boom-and-bust cycles, whereas the Turkish economy achieved a high and stable growth performance in the 2000s. In terms of industrial policy, the foot-loose behavior of foreign multinationals should be taken into account in designing investment incentives to attract foreign multinationals also pursuing sector specific policies and institutional reforms ensuring that managers have the right incentives to make long-term investment and to enhance absorptive capacity development. Besides, to improve the likelihood of firm survival, policy makers should target firm-specific characteristics that are crucial determinants of performance gaps in survival, primarily size, productivity and multinational activities. Concerning the issue of how the presence of foreign firms affects the domestic firms’ survival and employment growth, our findings suggest that there is a huge degree of heterogeneity across firms, periods and sectors in both countries. However, positive evidence in favour of positive spillovers is not overwhelming. In the case of Italy, the survival of domestic firms is positively affected by the increased presence of foreign firms within the same industry, but this only occurs in low- and medium-low tech industries. This result may be due to the fact that domestic firms in medium-high tech industries have not enough absorptive capacity to benefit from FDI spillovers. The relevance of domestic firms’ absorptive capacity for spillover effects is confirmed by our analysis: only domestic firms that have smaller technology gap vis-à-vis foreign firms benefit from significant horizontal and vertical (upstream) spillovers on survival. From the system GMM growth estimates we find that, in terms of FDI spillovers, there is evidence of a negative impact on domestic firms employment growth if the foreign firm share in the region employment increases (negative local spillovers), .and a negative employment impact for firms with a higher technology gap is detected if the foreign firm share in the sector increases. For Turkey, the regional share of foreign firms has a weak negative static impact on the survival rate, and an increase in the share of foreign firms in a sector also has a negative impact on survival in the 2003-2009 period. The foreign share of users seems to have positive coefficients, i.e., domestic firms will be more likely to survive if users are foreign, but these results are statistically significant only if firm-specific effects are not controlled for in the 2003-2009 period. Moreover, there is some evidence of a negative effect on survival if downstream firms are foreign in the 2003-2009 period. Regarding firm growth, foreign suppliers and change in regional share of foreign firms have strong negative impact on domestic firms' growth rates, i.e., those firms supplied by upstream foreign firms, and those firm operating in regions with an increasing foreign presence experience lower growth rates. There is also a weak negative impact of sectoral foreign share on growth whereas a weak positive impact is observed for the change in sectoral foreign share. These results do not support the broad conclusion that FDI have positive impact on firms’ indigenous survival and growth dynamics. Conversely, our findings provide not a favorable picture in terms of the balance between displacement/competition versus spillover effects of FDI on domestic firms. We also obtain evidence indicating that the interaction between the presence of foreign firms and domestic firm survival is markedly affected by the technological environment that shapes up domestic firms’ absorptive capacity. The displacement effect in dynamic industries implies that the damage is concentrated on high-tech firms, which should be the higher quality segment of national production. In terms of industrial policy, this implies that the desire to encourage FDI and simultaneously building up a stable supply of indigenous enterprises is more challenging in dynamic sectors, where a trade-off in terms of these objectives appears to exist. |
| Keywords: | International investment; Multinational firms; Duration analysis; Firm performance; International Linkages to Development |
| JEL: | C41 F21 F23 L25 O19 |
| Date: | 2013–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:sal:celpdp:0127&r=bec |
| By: | de Coulon, Sonia; Baltar, Fabiola |
| Abstract: | Literature regarding to the process of firm's start-ups has supported the idea that the entrepreneur fulfills a key role in the economic development, because of his strategic vision and as a result of his capacity to generate innovations, but also employment and economic growth. Nevertheless, recent empirical studies, have mainly tackled the process from the demand perspective, with focus on institutional, economical and context aspects that favours or hinders the development of the entrepreneurial capacities. In this sense, the entrepreneur's role, his skills, his decisions and actions have been less observed from the economical field and from the strategic decision area. Even though the debate about the importance of recognizing the subjectivity forecasting of the key drivers that impact and define the observed phenomenon is increasing. The aim of the article is to understand the innovative entrepreneur's role in the entrepreneurial process through the use of a biographic design method, so as to identify throughout his life the way he decides to initiate a firm, how he experiences the process and evaluates its performance. For that reason, it is proposed to analyze Enrique Eskenazi's entrepreneurial life, Grupo Petersen's President, one of the leading economic groups in the Argentinean business arena. His public recognition is associated to the YPF S.A's shares purchase in 2008 - the Leader oil company in the Argentinean market -, which has been recently nationalized. |
| Keywords: | Emprendedores; Rol; Dinámica Empresarial; Toma de Decisiones; |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:nmp:nuland:1828&r=bec |
| By: | Nuno Rosa Reis (Instituto Politécnico de Leiria); Manuel Portugal Ferreira (Instituto Politécnico de Leiria); João Carvalho Santos (Instituto Politécnico de Leiria) |
| Abstract: | Culture and the influence of national cultures and cultural differences have been widely studied in International Business (IB) research especially over the past three decades. To better understand what culture actually means and its implications on firms’ international operations, several cultural models and taxonomies have been put forward. In this paper we review the main cultural models in the extant IB research – Hofstede’s (1980), Hall’s (1976) and Troompenaars’ (1993) – and Kogut and Singh’s (1988) concept of cultural distance. In a bibliometric study of over 3,600 articles published in seven top ranked journals for IB research, we examine citations and co-citations to assess the relative use of the cultural models and the ties binding authors and theories studied. This study offers a wealth of information on the current state of IB-related research using culture that may be used to better understand the intellectual structure of the sub-field of cultural issues in IB studies but also to identify gaps for future inquiry. The results help setting a profile of the network of knowledge and permit us conclude that Hofstede’s (1980) taxonomy on cultural characteristics is the most cited cultural taxonomy and holds ties to many of the core streams of IB-related research. In fact, despite the well-known criticisms, there is an increasing use of Hofstede’s dimensions. |
| Keywords: | Cultural models, Hofstede, Trompenaars, Hall, review, bibliometric study |
| JEL: | M0 M1 |
| Date: | 2013–09–29 |
| URL: | http://d.repec.org/n?u=RePEc:pil:wpaper:104&r=bec |
| By: | Giammario Impullitti; Omar Licandro |
| Abstract: | The availability of rich ?rm-level data has led researchers to uncover new evidence on the effects of trade liberalization. First, trade openness forces the least productive fi?rms to exit the market; secondly, it induces surviving fi?rms to increase their innovation efforts; thirdly, it increases the degree of product market competition. In this paper, we propose a model aimed at providing a coherent interpretation of these ?ndings, and use it to asses the role of fi?rm selection in shaping the aggregate welfare gains from trade. We introduce ?firm heterogeneity into an innovation-driven growth model where incumbent fi?rms operating in oligopolistic industries perform cost-reducing innovation. In this environment, trade liberalization leads to lower markups level and dispersion, tougher fi?rm selection, and more innovation. Calibrated to match US aggregate and fi?rm-level statistics, the model predicts that moving from a 13% variable trade costs to free trade increases the stationary annual rate of productivity growth from 1:19 to 1:29% and increases welfare by about 3% of steady state consumption. Selection accounts for about 1/4th of the overall growth increase and 2/5th of the welfare gains from trade. |
| Keywords: | International Trade, Heterogeneous Firms, Oligopoly, Innovation, Endogenous Markups, Welfare, Competition. JEL codes: F12, F13, O31, O41 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:not:notecp:13/04&r=bec |