nep-bec New Economics Papers
on Business Economics
Issue of 2013‒11‒29
ten papers chosen by
Vasileios Bougioukos
Bangor University

  1. Technological competencies and firm performance: Analyzing the importance of internal and external competencies By Grillitsch, Markus; Nilsson , Magnus
  2. A Note on the Link between Firm Size and Exports By Hernandez, Pedro J.
  3. Downstream mode of competition with upstream market power By Manasakis, Constantine; Vlassis, Minas
  4. Learning by Doing in a Multi-Product Manufacturing Environment: Product Variety, Customizations, and Overlapping Product Generations By Carolyn D. Egelman; Dennis Epple; Linda Argote; Erica R.H. Fuchs
  5. Market Timing Ability of Indian Firms in Open Market Repurchases By Agarwalla, Sobhesh Kumar; Jacob, Joshy; Vasudevan, Ellapulli
  6. Determinants of firms' investment behaviour: A multilevel approach By Farla, Kristine
  7. Skilled Immigration and the Employment Structures of U.S. Firms By Sari Pekkala Kerr; William R. Kerr; William F. Lincoln
  8. Feedback Equilibria in a Dynamic Renewable Resource Oligopoly: Pre-Emption, Voracity and Exhaustion By Luca Lambertini; Andrea Mantovani
  9. Are clusters more resilient in crises? Evidence from French exporters in 2008-2009 By Philippe MARTIN; Thierry MAYER; Florian MAYNERIS
  10. Wage Comparisons in and out of the Firm. Evidence from a Matched Employer-Employee French Database By Olivier Godechot; Claudia Senik

  1. By: Grillitsch, Markus (CIRCLE, Lund University); Nilsson , Magnus (CIRCLE, Lund University)
    Abstract: In this paper, we analyze the relationship between technological competencies (TC) and firm performance. Theoretically, the importance of TC is well established and widely accepted. Therefore, it is surprising that a number of empirical studies have been unable to confirm a substantial positive relationship between TC and firm performance. We identify two major reasons for this: [i] affected by the availability and choice of indicators existing studies are often biased towards large firms; and [ii] they frequently do not consider both internal and potential access to firm-external TC. This paper discusses conceptually the interplay between firm-internal and firm-external TC as well as the mediating effect of firm size. These relationships are then analyzed empirically using Swedish micro data on 15,682 firms in 290 Swedish municipalities. Novel indicators based on occupational statistics are combined with measures of time-distance accessibility to study internal and external TC. The results provide evidence for a positive relationship between firm growth and TC. In particular, the combination of firm-internal and firm-external competencies seems to be conducive for growth. Lastly, our study suggests that firm size is an important factor to further our understanding about these relationships. Based on this we identify a number of future research questions to be addressed.
    Keywords: technological competencies; firm performance; accessibility; knowledge; innovation; geography
    JEL: L25 O18 O30
    Date: 2013–09–19
  2. By: Hernandez, Pedro J.
    Abstract: This paper re-examines the link between firm size and exports in order to study the proposal that consists of increasing the firm size to raise exports as a way out of the current economic crisis. The elasticity of export propensity (percentage of exported sales) with respect to firm size depends on several firm characteristics. The new theories of international trade emphasize the firm heterogeneity as the theoretical basis of this behaviour. In the context of such heterogeneity, this paper uses the quantile regression methodology to analyze the effect of firm size on export propensity of the firms, confirming the existence of a positive relationship that becomes less important as export propensity increases. The traditional estimate of this elasticity on the average of the export propensities distribution underestimates the effect in the bottom of the distribution and overestimates the effect on most of it.
    Keywords: Exports, Firm Size
    JEL: F14 L25
    Date: 2013–11–19
  3. By: Manasakis, Constantine; Vlassis, Minas
    Abstract: In a two-tier oligopoly, where the downstream firms are locked in pair-wise exclusive relationships with their upstream input suppliers, the equilibrium mode of competition in the downstream market is endogenously determined as a renegotiation-proof contract signed between each downstream firm and its exclusive upstream input supplier. We find that the upstream-downstream exclusive relationships credibly sustain the Cournot (Bertrand) mode of competition in the downstream market, when the goods are substitutes (complements). In contrast to previous studies, this result holds irrespectively of the degree of product differentiation and the distribution of bargaining power between the upstream and the downstream firm, over the pairspecific input price. --
    Keywords: Oligopoly,Vertical relations,Wholesale prices,Equilibrium mode of competition
    JEL: D43 L13 L42
    Date: 2013
  4. By: Carolyn D. Egelman; Dennis Epple; Linda Argote; Erica R.H. Fuchs
    Abstract: Extending research on organizational learning to multi-product environments is of particular importance given that the vast majority of products are manufactured in such environments. We investigate learning in a multi-product facility drawing on exceptionally rich data for a manufacturing firm that is a leading producer of high technology components. Weekly data for 10 years from the firm's production and human resource tracking systems are augmented by surveys of managers and engineers and by extensive first-hand observation. We find that productivity improves when multiple generations of the firm's primary product family are produced concurrently, reflecting the firm's ability to augment and transfer knowledge from older to newer product generations. No significant transfer of knowledge is evident between the primary product family and other products. Productivity is, however, decreased when the production facility is faced with extensive within-product buyer-specific customizations.We develop the implications of these findings for theory and practice.
    JEL: D2 L2 L6 O3
    Date: 2013–11
  5. By: Agarwalla, Sobhesh Kumar; Jacob, Joshy; Vasudevan, Ellapulli
    Abstract: The paper examines the market timing ability of Indian firms engaged in open market repur- chases. The study is primarily motivated by the unique disclosure feature of repurchases in India, where the disclosures are far more frequent than in any other market. We find that the repurchasing firms in India are able accumulate shares at favorable prices similar to the US market. However, the cost savings do not translate into significant wealth creation for the insiders as indicated by the short-run and long-run abnormal returns. This is contrary to the evidence from markets like the US. Further, the cross-sectional variations in the cost savings from repurchase execution in India are explained by the overall market returns and not by firm characteristics. These findings contrast with that of US, where the firm characteristics significantly explain the cross-sectional variation in the savings measure. It appears that the more frequent disclosure of repurchase activity in India cripples the market timing ability by reducing the information asymmetry between the firm and the outsiders. This conclusion is further supported by the irrelevance of the past or concurrent stock returns in explaining the time variation in the repurchase activity of firms.
  6. By: Farla, Kristine (UNU-MERIT / MGSoG)
    Abstract: This paper investigates micro and macro determinants of firms' investment behaviour using firm data from 101 developing and emerging economies. A substantial number of firms in our sample does not invest in fixed capital or invests little relative to sales revenue. Using a multilevel probit model we study what factors trigger investment and using a multilevel Heckman selection model we study what factors influence a firm's investment to sales ratio. Although we find that both micro and macro determinants explain investment behaviour, firms' investment behaviour is heterogeneous in nature and has little dependency on a country's macroeconomic setting. In addition, we find that, on average, firms which are completely foreign owned have a relatively lower investment to sales ratio. Finally, we find evidence which suggests that the probability of investing is higher for firms located in countries with more property rights protection and control of corruption and we find some evidence which suggests that foreign owned firms located in countries with `good' institutions invest relatively more.
    Keywords: Multilevel, Investment, Foreign ownership, Institutions
    JEL: E22 F20 O11 O12 O43
    Date: 2013
  7. By: Sari Pekkala Kerr; William R. Kerr; William F. Lincoln
    Abstract: We study the impact of skilled immigrants on the employment structures of U.S. firms using matched employer-employee data. Unlike most previous work, we use the firm as the lens of analysis to account for a greater level of heterogeneity and the fact that many skilled immigrant admissions are driven by firms themselves (e.g., the H-1B visa). OLS and IV specifications find rising overall employment of skilled workers with increased skilled immigrant employment by firm. Employment expansion is greater for younger natives than their older counterparts, and departure rates for older workers appear higher for those in STEM occupations compared to younger worker.
    JEL: F15 F22 J44 J61 O31 O32
    Date: 2013–11
  8. By: Luca Lambertini (Department of Economics, University of Bologna, Italy; ENCORE, University of Amsterdam, The Netherlands; Barcelona Institute of Economics (IEB), Spain; RCEA, Rimini, Italy); Andrea Mantovani (Department of Economics, University of Bologna, Italy; Barcelona Institute of Economics (IEB), Spain; RCEA, Rimini, Italy)
    Abstract: We revisit Benchekroun (2008) to describe a differential oligopoly game of resource extraction under static, linear feedback and nonlinear feedback strategies, to 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: 2013–10
  9. By: Philippe MARTIN (Sciences-Po and CEPR); Thierry MAYER (Sciences-Po, CEPII and CEPR); Florian MAYNERIS (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches économiques et sociales (IRES) andCenter for Operations Research and Econometrics (CORE))
    Abstract: Clusters have already been extensively shown to favor firm-level economic performance (productivity, exports, innovation etc.). However, little is known about the capacity of firms in clusters to resist economic shocks. In this paper, we analyze whether firms that agglomerate in clusters and firms that have been selected to benefit from the \competitiveness cluster" industrial policy, implemented in France in 2005, have performed better on export markets during the recent economic turmoil. We show that, on average, both agglomeration and the cluster policy are associated with a higher survival probability of firms on export markets, and conditioning on survival, a higher growth rate of their exports. However, these effects are not stronger during the 2008-2009 crisis; if anything, the opposite is true. We then show that this weaker resilience of competitiveness cluster firms is probably due to the fact that firms in clusters are more dependent on the fate of the \leader", i.e. the largest exporter in the cluster.
    Keywords: Clusters, Competitiveness clusters, Exports, Crisis, Resilience
    JEL: F1 R10 R11 R12 R15
    Date: 2013–09–19
  10. By: Olivier Godechot (IEP Paris - Sciences Po Paris - Institut d'études politiques de Paris - Institut d'Études Politiques [IEP] - Paris - PRES Sorbonne Paris Cité - Fondation Nationale des Sciences Politiques [FNSP], OSC - Observatoire sociologique du changement - Sciences Po - CNRS : UMR7049, MaxPo - Max Planck Sciences Po Center on Coping with Instability in Market Societies - Max Planck Institute for the Study of Societies - IEP Paris); Claudia Senik (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA), UP4 - Université Paris 4, Paris-Sorbonne - Université Paris IV - Paris Sorbonne - Ministère de l'Enseignement Supérieur et de la Recherche Scientifique)
    Abstract: This paper looks at the association between wage satisfaction and different notions of reference wage, based on a matched employer-employee dataset. It shows that workers' satisfaction depends on otherpeople's income in different ways. Relative income concerns are important, but we also find robust evidence of signal effects. For instance, workers are happier the higher the median wage in their firm, holding their own wage constant. This is true of all employees, whatever their relative position in the firm. This signal effect is stronger for young people and for women. These findings are based on objective measures of earnings as well as subjective declarations about wage satisfaction, awareness of other people's wage and reported income comparisons.
    Keywords: Income comparisons ; Income distribution ; Job satisfaction ; Wage satisfaction ; Signal effect ; Matched employer-employee survey data
    Date: 2013–11

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