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on Business Economics |
| By: | Drobetz, Wolfgang; von Meyerinck, Felix; Oesch, David; Schmid, Markus |
| Abstract: | We analyze the valuation effect of board industry experience and channels through which industry experience of outside directors affects firm value. Firms with more experienced outside directors are valued at a premium compared to firms with less experienced outside directors. Additional tests indicate that our results stem from within-firm variation and that board industry experience causes higher firm values. Firms with experienced boards exhibit lower investment-cash flow sensitivities, build up valuable financial slack by holding cash, shape operating policies, and provide better incentivized compensation packages to CEOs. Our results suggest that board industry experience is a valuable corporate governance mechanism. |
| Keywords: | Board of directors, Director skills and experience, Corporate governance |
| JEL: | G32 G34 |
| URL: | http://d.repec.org/n?u=RePEc:usg:sfwpfi:2014:01&r=bec |
| By: | Poschke, Markus (McGill University) |
| Abstract: | How and why does the firm size distribution differ across countries? Using two datasets covering more than 30 countries, this paper documents that several features of the firm size distribution are strongly associated with income per capita: the entrepreneurship rate and the fraction of small firms fall with per capita income across countries, while average firm employment, the median and higher percentiles of the firm size distribution, and the dispersion and skewness of employment all rise with per capita income. The paper broadens existing evidence on the first three facts to cover more countries and newly introduces the last three to the literature. It then proposes a simple theory of skill-biased change in entrepreneurial technology motivated by recent microeconomic literature that fits with the evidence. For this, it introduces two additional features into an otherwise standard occupational choice, heterogeneous firm model a la Lucas (1978): technological change does not benefit all potential entrepreneurs equally, and there is a positive relationship between an individual's potential payoffs in working and in entrepreneurship. If some firms consistently benefit more from technological progress than others, they stay closer to the frontier, while others fall behind. Because wages rise for all workers, marginal entrepreneurs exit and become workers. Quantitatively, the model fits both the U.S. time series experience and cross-country patterns well. |
| Keywords: | occupational choice, entrepreneurship, firm size, skill-biased technical change |
| JEL: | E24 J24 L11 L26 O30 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7991&r=bec |
| By: | Tor Eriksson (Department of Economics and Business, Aarhus University, Denmark); Zhihua Qin (Renmin University, China,); Wenjing Wang (Department of Economics and Business, Aarhus University, Denmark) |
| Abstract: | This paper examines the relationship between employee turnover, HRM practices and innovation in Chinese firms in five high technology sectors. We estimate hurdle negative binomial models for count data on survey data allowing for analyses of the extensive as well as intensive margins of firms’ innovation activities. Innovation is measured both by the number of ongoing projects and new commercialized products. The results show that higher R&D employee turnover is associated with a higher probability of being innovative, but decreases the intensity of innovation activities in innovating firms. Innovating firms are more likely to have adopted high performance HRM practices, and the impact of employee turnover varies with the number of HRM practices implemented by the firm. |
| Keywords: | Innovation, HRM Practices, Employee Turnover |
| JEL: | L22 M50 O31 |
| Date: | 2014–02–25 |
| URL: | http://d.repec.org/n?u=RePEc:aah:aarhec:2014-09&r=bec |
| By: | Sotiris Georganas; Mirco Tonin; Michael Vlassopoulos |
| Abstract: | Peer effects arise in situations where workers observe each others’ work activity. In this paper we disentangle the effect of observing a peer from that of being observed by a peer, by setting up a real effort experiment in which we manipulate the observability of performance. In particular, we randomize subjects into three groups: in the first one subjects are observed by another subject, but do not observe anybody; in the second one subjects observe somebody else’s performance, but are not observed by anybody; in the last group subjects work in isolation, neither observing, nor being observed. We consider both a piece rate compensation scheme, where pay depends solely on own performance, and a team compensation scheme, where pay also depends on the performance of other team members. Overall, we find some evidence that subjects who are observed increase productivity at least initially when compensation is team based, while we find that subjects observing react to what they see when compensation is based only on own performance. |
| Keywords: | peer effects, piece rate, team incentives, real-effort experiment |
| JEL: | D03 J24 M52 M59 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_4572&r=bec |
| By: | Gabriel Natividad (NYU Stern) |
| Abstract: | I exploit a 2009 reform that introduced individual fishing quotas (catch shares) for Peruvian anchovy – the largest fishery in the world – to assess the causal impact of production quotas on within-firm productivity and market prices. Unique features of the data allow me to create two alternative counterfactuals: (i) anchovy fishing operations in a region of the country that was mandated to implement quotas with a delay, and (ii) variation in quota allocations across ships. I find that quotas do not increase within-asset or within-firm productivity in quantities. Instead, a 200% increase in anchovy prices benefits extraction firms through higher revenues, consistent with two mechanisms enacted by individual fishing quotas: more orderly industry operations reducing excess supply and an increase in bargaining power of extraction firms with respect to fish-processing. Several market characteristics across geographies differentially affect market prices after the quota regime. Supplementary evidence on fewer operational infractions, higher product quality, and a lower banking delinquency observed during the quota regime suggests the existence of efficiency gains rather than purely rent transfers. |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:apc:wpaper:2014-006&r=bec |
| By: | Fabrizio Antonioli (Dipartimento di Economia Istituzioni Territorio, Facoltà di Economia, Università degli Studi di Ferrara.); Simone Borghesi (Università degli Studi di Siena, Facoltà di Scienze Politiche.); Massimiliano Mazzanti (Departiment of Economics, Università di Ferrara (italy).) |
| Abstract: | The adoption and diffusion of environmental innovations (EIs) is crucial to greening the economy and achieving win-win environmental – economic gains. A large and increasing literature has focused on the levers underlying EIs that are external to the firm, such as stakeholder’s pressure and policy pressure. Little attention, however, has been devoted so far to the possible role of local spatial spillovers. The latter can be very relevant since growth depends on strong idiosyncratic regional factors – such asagglomeration economies - that must be integrated with the challenges posed by global markets. To overcome this drawback of the existing literature, we analyse here a rich dataset that covers the innovative activities and economic performances of firms in the Emilia-Romagna Region in Italy, a manufacturing district-rich area. We analyse firms’ performances through a two-step procedure. First, we look at the relevance of spatial levers, namely whether the agglomeration of EIs induces EIs in a given firm. Second, we test whether EIs have significantly increased firms’ economic performances. As to the importance of spatial levers, the role of agglomeration turns out to be fairly local in nature:we find that spillovers are significantly inducing innovation within municipal boundaries, which is coherent with the district-based Marshallian economies of north- eastern Italy. Regarding economic performances, firms' productivity is positively related to EI adoption; in particular,firms that adopt EIs and organizational change show a better economic performance.Our findings suggest that EIscanbe a key source of growth for regional systems, particularly when spurred by local spillovers, and an important way outof the ongoing crisis. |
| Keywords: | environmental innovations, firm economic performances, local spillovers, manufacturing, agglomeration |
| JEL: | O38 Q55 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:srt:wpaper:0414&r=bec |
| By: | Fackler, Daniel |
| Abstract: | Using a large administrative dataset and methods of survival analysis, I analyze for the period 1994-2008 whether new establishments' survival chances differ between East and West Germany and whether they converged over time. I find that new establishments in East Germany had relatively good survival chances between 1994 and 1997, with no big differences between East and West Germany. In 1998 and 1999 the exit hazard increased strongly in East but not in West Germany, which is likely to be due to a change in the subsidy policy affecting East Germany. Since 2000 the difference in establishments' exit hazard between East and West Germany has become smaller and towards the end of the observation period it is not statistically significant anymore. -- Anhand umfangreicher administrativer Daten untersucht diese Studie für die Jahre 1994 bis 2008 mit Methoden der Verweildaueranalyse, ob sich die Überlebenschancen neu gegründeter Betriebe zwischen West- und Ostdeutschland unterscheiden und ob sie sich im Zeitablauf angenähert haben. Die Ergebnisse zeigen, dass Betriebe in Ostdeutschland von 1994 bis 1997 relativ gute Überlebenschancen aufweisen, die sich kaum von denen westdeutscher Betriebe unterscheiden. In den Jahren 1998 und 1999 steigt die Schließungswahrscheinlichkeit in Ostdeutschland stark an, in Westdeutschland jedoch nicht, was vermutlich auf eine Änderung der Subventionspolitik für Betriebe in Ostdeutschland zurückzuführen ist. Seit dem Jahr 2000 haben sich die Schließungswahrscheinlichkeiten von Betrieben in West- und Ostdeutschland angenähert und unterscheiden sich gegen Ende des Beobachtungszeitraums nicht mehr signifikant voneinander. |
| Keywords: | startups,firm exits,East Germany |
| JEL: | L2 D22 M13 P27 C41 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:faulre:90&r=bec |
| By: | Marcela Eslava (Universidad de Los Andes); John Haltiwanger (University of Maryland and NBER); Adriana Kugler (Georgetown University, NBER, and Department of Labor.); Maurice Kugler (UNDP) |
| Abstract: | We assess the impact, on workforce contract composition, employment adjustment dynamics and productivity, of a combination of changes in the Colombian labor legislation which increased firm’s ability of using contracts of a temporary nature, and posterior changes that increased the costs associated with longer term contracts. Until 1990, labor regulations in Colombia practically banned the possibility of using fixed-term contracts for horizons of less than one year (see, e.g. Kugler, 2004). The labor market component of a broad package of market reforms adopted at the beginning of the nineties opened the possibility of hiring under fixed term contracts of different types. Some of these contracts not only free employers of potential dismissal costs, but are also subject to reduced, or even zero, non-wage costs. Regulatory changes occurred in the decade that followed further increased incentives to use fixed term contracts. |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:dls:wpaper:0154&r=bec |
| By: | Ko, Chia Chiun (University of Queensland); Frijters, Paul (University of Queensland) |
| Abstract: | This paper examines the welfare loss of import restrictions on bananas in Australia and whether the import restrictions have turned into a particular form of export promotion. We set up a model in which there is free domestic entry, with banana producers accepting losses in normal years, off-set by large profits in years when cyclones destroy a large proportion of the banana plants because of sufficiently low elasticity of demand. Using the cyclones of 2006 and 2011 as exogenous events, we identify the elasticity of demand for bananas in Australia to be around -0.5. We indeed find limited evidence for an ‘over-shooting’ in terms of the supply response after these cyclones, leading to positive exports years after cyclones have hit and re-planted banana plants have become productive. Combining the elasticity estimates with information on turnover, we get an estimated welfare loss of 600 million dollars per year due to banana import restrictions. |
| Keywords: | competition, import restrictions, exogenous shocks, instrumental variables, surplus |
| JEL: | Q17 L2 C26 D61 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7988&r=bec |
| 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 fi rms themselves (e.g., the H-1B visa). OLS and IV speci cations 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. |
| Keywords: | Immigration, Employment, Firms, Age, Scientists, Engineers, Inventors, H-1B. |
| JEL: | F15 F22 J44 J61 O31 |
| Date: | 2014–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2014-1071&r=bec |
| By: | Faiçal Belaid (Central Bank of Tunisia) |
| Abstract: | This paper uses probit and ordered probit methods to examine the impact of banks’ policies in terms of cost efficiency, capitalization, activity diversification, credit growth and profitability, on the loan quality in the Tunisian banking sector after controlling for the effects of firm-specific characteristics and macroeconomic conditions. Using a data set with detailed information for more than 9 000 firms comprising the portfolios of the ten largest Tunisian banks, we show that banks which are cost inefficient, low capitalized, diversified and small, are more likely to have a low quality of loans portfolios. However, bank’s profitability does not seem to offer an important contribution in explaining the loan quality evolution. Finally, our findings highlight the importance of taking into account firm-specific characteristics and macroeconomic developments when assessing the loan quality of banks from a financial stability perspective. |
| Keywords: | Problem loan, Bank specific factors, Firm specific characteristics, Probit models, Ordered probit models |
| Date: | 2014–02–18 |
| URL: | http://d.repec.org/n?u=RePEc:gii:giihei:heidwp04-2014&r=bec |
| By: | Vassilis Monastiriotis |
| Abstract: | The process of approximation between the EU and its ‘eastern neighbourhood’ has created conditions for deepening economic interactions and market integration, giving to the EU – and to EU businesses– an elevated role in the process of economic modernisation and transition in the neighbourhood countries. This raises the question as to whether European business activity in these countries produces indeed measureable economic advantages both in absolute and in relative terms (e.g., compared to business activity from other parts of the world). Similarly, a question arises as to whether European business activity reduces or amplifies spatial imbalances within the partner countries. This paper examines these issues for the case of capital flows (foreign ownership) and the related productivity spillovers, using firm-level data from the Business Environment and Enterprise Performance Survey (BEEPS)covering 28 transition countries over the period 2002-2009. We estimate the direct and intraindustry productivity effects of foreign ownership and examine how these differ across regional blocks (CEE, SEE and ENP), according to the origin of the foreign investor (EU versus non-EU), across geographical scales (pure industry versus regional spillovers) and for different types of locations (capital-city regions versus the rest). Our results suggest that FDI of EU origin plays a distinctive role in the countries concerned helping raise domestic productivity significantly more than investments from outside the EU. However, this process appears to operate in a spatially selective manner, thus enhancing regional disparities and spatial imbalances. This, then, assigns a particular responsibility for EU policy, as it continues to promote economic integration (and FDI flows) to its eastern neighbourhood, to devise interventions that will help redress these problems. |
| JEL: | N0 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:55267&r=bec |
| By: | Sadaf Bashir; Uwe Matzat; Bert Sadowski |
| Abstract: | This paper analyzes processes and effects of ICT enabled innovation in the Dutch design sector. Although the adoption of Information and Communication Technologies (ICT) is considered as vital in the design sector, little is known about whether and how ICTs affect the firm performance of small and medium-sized companies (SMEs) in the industry. In introducing a conceptual distinction between ICT supporting the information processing and communication, the paper first examines the determinants of ICT adoption. Next, we analyze the effects of ICT adoption on product and process innovation as well as on firm performance, focusing on the mediating role of the innovation processes. The analyses rest on survey data of a sample of 189 Dutch companies in the Web, Graphic, and Industrial Design Sector in the Netherlands. The results indicate that information processing role of ICT supports the exploitation and communication role facilitates the exploration in organizational learning. The exploitation enables process innovation while exploration enables product innovation. Lastly, Information processing technologies and product innovation are important determinants of superior firm performance. |
| Keywords: | ICT, design, innovation |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:ein:tuecis:1401&r=bec |
| By: | Sumon K. Bhaumik; Ying Zhou |
| Abstract: | Business groups, which are ubiquitous in emerging market economies, balance the advantages of characteristics such as internal capital markets with the disadvantages such as inefficient internal distribution of resources and suppression of technological and other forms of innovativeness. In this paper, we examine, in the Indian context, whether business group affiliation provides an advantage over unaffiliated (or private independent) firms with respect to technological progress, which lies at the heart of wider economic growth and prosperity. Our results suggest that while business group affiliation did provide an advantage over private independent firms at the start of the sample period (2000), this advantage was more than offset by the turn of the century. We discuss the implications of our results for economic growth rates in emerging market economies. |
| Keywords: | Business groups; Technological progress; India |
| JEL: | D24 L21 L22 O12 |
| Date: | 2014–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2014-1066&r=bec |
| By: | William R. Kerr; William F. Lincoln; Prachi Mishra |
| Abstract: | How is economic policy made? In this paper we study a key determinant of the answer to the question: lobbying by fi rms. Estimating a binary choice model of firm behavior, we fi nd signifi cant evidence for the idea that barriers to entry induce persistence in lobbying. The existence of these costs is further confi rmed in studying how fi rms responded to a particular policy change: the expiration of legislation relating to the H-1B visa. Due to its influence on fi rm behavior, we argue that this persistence fundamentally changes the environment in which legislation is made. |
| Keywords: | lobbying, political economy, immigration, H-1B. |
| JEL: | D72 D73 D78 F22 F23 J61 O31 O38 |
| Date: | 2014–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2014-1072&r=bec |