nep-bec New Economics Papers
on Business Economics
Issue of 2013‒10‒25
eleven papers chosen by
Vasileios Bougioukos
Bangor University

  1. Extreme Wage Inequality: Pay at the Very Top By Brian Bell; John Van Reenen
  2. The Value of Corporate Culture By Luigi Guiso; Paola Sapienza; Luigi Zingales
  3. Are New German Postal Providers Successful? Empirical Evidence Based on Unique Survey Data By Toufic M. El Masri
  4. Incomplete Contracts and the Internal Organisation of Firms By Phillipe Aghion; Nicholas Bloom; John Van Reenen
  5. Ownership structure and acquirers performance: Family vs. non-family firms By Houssam Bouzgarrou; Patrick Navatte
  6. Welfare Enhancing Coordination in Consumer Cooperatives under Mixed Oligopoly. By Marco Marini; Paolo Polidori; Alberto Zevi; Désirée Teobaldelli
  7. Institutions and Firm Formation: an Empirical Analysis of Portuguese Municipalities By Simão Arouca
  8. Is Misallocation Higher in France than in the United States? By Flora Bellone; Jérémy Mallen-Pisano
  9. Family connections and entrepreneurial human capital: The uncertain destiny of proprietary capitalism By Maria Rosaria Carillo; Vincenzo Lombardo; Alberto Zazzaro
  10. Apple’s Changing Business Model: What Should the World’s Richest Company Do with All Those Profits? By William Lazonick; Mariana Mazzucato; Öner Tulum
  11. Open Innovation in a dynamic cournot duopoly By Hasnas, Irina; Lambertini, Luca; Palestini, Arsen

  1. By: Brian Bell; John Van Reenen
    Abstract: We provide new evidence on the growth in pay at the very top of the wage distribution in the UK. Sectoral decompositions show that workers in the financial sector have accounted for the majority of the gains at the top over the last decade. New results are also presented on the pay of CEOs in the UK. We show how improved measurement of pay points to a stronger pay-performance link than previously estimated. This link is stronger, and more symmetric, for those firms in which institutional investors play a larger role.
    Keywords: wage inequality, firm performance, CEO compensation, performance pay, management
    Date: 2013–02
  2. By: Luigi Guiso (EIEF and CEPR); Paola Sapienza (Northwestern University, NBER and CEPR); Luigi Zingales (University of Chicago, NBER and CEPR)
    Abstract: We study which dimensions of corporate culture are related to a firm’s performance and why. We find that proclaimed values appear irrelevant. Yet, when employees perceive top managers as trustworthy and ethical, firm’s performance is stronger. We then study how different governance structures impact the ability to sustain integrity as a corporate value. We find that publicly traded firms are less able to sustain it. Traditional measures of corporate governance do not seem to have much of an impact.
    Date: 2013
  3. By: Toufic M. El Masri (Leuphana University Lueneburg, Germany)
    Abstract: In order to investigate firm survival and the potential for competition in the German postal market, I analyzed key success determinants of market leader competitors. The analysis is based on eight 2011 case studies, in which I conducted in-depth interviews during on-site visits to various postal firms. The analysis is further supported by unique data stemming from a survey I conducted in 2010 for the German postal market. In general, I find that there are possibilities for smaller private firms to succeed and survive in the market despite the natural monopoly occurring within the postal industry. The success of these firms is often based on specialization, cooperation and combining the postal business with another business, such as publishing.
    Keywords: Competition, Firm Survival, Germany, Postal Sector, Success
    JEL: D24 L51 L97 L22
    Date: 2013–10
  4. By: Phillipe Aghion; Nicholas Bloom; John Van Reenen
    Abstract: We survey the theoretical and empirical literature on decentralization within firms. We first discuss how the concept of incomplete contracts shapes our views about the organization of decision-making within firms. We then overview the empirical evidence on the determinants of decentralization and on the effects of decentralization on firm performance. A number of factors highlighted in the theory are shown to be important in accounting for delegation, such as heterogeneity and congruence of preferences as proxied by trust. Empirically, competition, human capital and IT also appear to foster decentralization. There are substantial gaps between theoretical and empirical work and we suggest avenues for future research in bridging this gap.
    Keywords: uncertainty
    JEL: E3
    Date: 2013–03
  5. By: Houssam Bouzgarrou (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie); Patrick Navatte (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie)
    Abstract: This paper investigates the impact of family control on French acquirers' performance.We consider a sample of 239 acquisitions undertaken by French listed companies between January 1997 and December 2006. Comparing both, short-termand long-termperformance,we find that family-controlled firms outperformnon-family firms. We find that the relationship depends on the control level. The higher operating performance of family firms is statistically significant for an intermediate level of control. Around the announcement date, family firms with a high level of control outperform non-family firms. Using the calendar time approach, we find that long-term stock performance of family firms is positive and statistically significant. Robustness tests showthat our findings seem to not be driven by the endogeneity problem. Finally, we find that family wedge, due to the use of the pyramidal structure and the double voting rules, has no statistical significant effect.
    Keywords: Acquisitions ; family firms ; agency theory ; stock performance ; operating performance
    Date: 2013
  6. By: Marco Marini (Department of Computer, Control and Management Engineering, Università "La Sapienza" Roma); Paolo Polidori (Department of Law, University of Urbino “Carlo Bo”); Alberto Zevi (University of Rome "La Sapienza".); Désirée Teobaldelli (Department of Law, University of Urbino “Carlo Bo”)
    Abstract: The aim of this paper is to study the welfare e¤ects of consumer cooperatives in mixed oligopoly markets. We show that under decreasing returns to scale and su¢ ciently high market competition these …rms can contribute more to social welfare when acting on behalf of all consumers rather than only one representative consumer. This is because, by coordinating the preferences of consumers, these …rms reduce their excessive market output, helping the market to come closer to the …rst-best. In all other cases we show that such consumerscoordination is not required to improve welfare.
    Keywords: Consumer-owned Firms, Mixed Oligopoly, Collusion, Welfare
    JEL: C70 C71 D23 D43
    Date: 2013
  7. By: Simão Arouca (Nova School of Business and Economics. Office for Strategy and Studies (GEE), Portuguese Ministry of Economy and Employment.)
    Abstract: The uneven spatial distribution of start-ups observed for Portugal from 2003 to 2009 suggests that local attributes, among which the quality of municipal institutions and their respective governance, impact the entrepreneurial process. Through the usage of a fixed effects negative binomial model, this thesis examines the role of municipalities in stimulating firm births, finding both the development of business-related infrastructures and the signals stemming from sound financial management to be the most relevant determinants. While some significance, although conditional, can be assigned to fast-paced licensing and EU structural funding, political right-left preferences appear to exert a negligible influence.
    Keywords: Firm Formation; Municipalities; Institutions.
    JEL: M13 R32
    Date: 2013–10
  8. By: Flora Bellone (GREDEG CNRS; University of Nice-Sophia Antipolis, France); Jérémy Mallen-Pisano (GREDEG CNRS; University of Nice-Sophia Antipolis, France)
    Abstract: In this paper, we apply the Hsieh and Klenow (2009) methodology to French microdata on manufacturing firms to quantify the potential extent of intra-industry misallocation in France versus the United States. In contrast to what has been found for developing countries, such as China, India and some countries in Latin America, we do not find any sizeable ”efficiency gap” between France and the U.S. in the manufacturing industry. This new evidence is robust to a series of tests addressing both measurement and specification issues. In light of recent advances in the fields of productivity and misallocation, and in particular Bartelsman et al. (2013), we also discuss to what extent our new empirical findings challenge the established view on which continental European economies have higher input and output distortions than the American economy.
    Keywords: Misallocation, Productivity, Manufacturing, Firm-level data, France
    JEL: O47 O57
    Date: 2013–10
  9. By: Maria Rosaria Carillo (University of Naples Parthenope); Vincenzo Lombardo (University of Naples Parthenope); Alberto Zazzaro (Universit… Politecnica delle Marche, MoFiR)
    Abstract: Two general conclusions can be drawn from the historical and empirical economic research on family firms: (1) it is impossible to identify a single definitive destiny for proprietary capitalism in the process of industrial development regardless of the cultural and institutional context in which the family firms operate; (2) in the same or similar economic environments well-performing (well managed) coexist with underperforming (poorly managed) family firms. In this paper, we develop an overlapping generations model, where agents are endowed with heterogeneous innate talent, and family firms have a comparative advantage over non-family enterprises as they have access to an additional source of immaterial capital, namely the network of family connections. Our results accommodate both the polarization of family firms into two groups with different levels of profitability and the uncertain destiny of proprietary capitalism between a crony and an entrepreneurial society, depending on the institutional framework and technological dynamism of the economy.
    Keywords: Family firms, allocation of talents, economic growth, family connections, technological change
    JEL: J62 L26 O40
    Date: 2013–10
  10. By: William Lazonick (University of Massachusetts, Lowell, USA); Mariana Mazzucato (SPRU, University of Sussex, UK); Öner Tulum (University of Massachusetts, Lowell, USA)
    Date: 2013–10–16
  11. By: Hasnas, Irina; Lambertini, Luca; Palestini, Arsen
    Abstract: In recent years Open Innovation (OI) processes have been receiving growing attention from the empirical and theoretical economic literature, where a debate is taking place on the aspects of complementarity or substitutability between internal R&D and OI spillover. By means of a differential game approach, we analyze the case of substitutability in an OI setup in a Cournot duopoly where knowledge spillovers are endogenously determined via the R&D process. The game produces multiple steady states, allowing for an asymmetric solution where a firm may trade off the R&D investment against information absorption from the rival. The technical analysis and the numerical simulations point out that the firm which commits to a higher level of OI absorption produces a smaller output and enjoys higher profits than its rival. --
    Keywords: R&D,spillovers,dynamic games
    JEL: C73 L13 O31
    Date: 2013

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