nep-bec New Economics Papers
on Business Economics
Issue of 2014‒04‒11
twelve papers chosen by
Vasileios Bougioukos
Bangor University

  1. Regulatory environment and firm performance in EU telecommunications services By Daniel Montolio; Francesc Trillas; Elisa Trujillo-Baute
  2. Immigrants and Firms' Productivity: Evidence from France By Mitaritonna, Cristina; Orefice, Gianluca; Peri, Giovanni
  4. Trust-based Work-time and Product Improvements: Evidence from Firm Level Data By Olivier N. Godart; Holger Görg; Aoife Hanley
  5. Nonprofit Firms in a Linear City with Nonnegative Profits By Christopher Hoag; Kamal Lamsal
  6. Firm Knowledge, Neighborhood Diversity and Innovation By Wixe, Sofia
  7. Is Export Diversification good for Profitability? First Evidence for Manufacturing Enterprises in Germany By Wagner, Joachim
  8. Transaction-Specific Investments and Organizational Choice: A Coase-to-Coase Theory By Thomas J. Miceli
  9. Innovation, Firm Risk and Industry Productivity By Maliranta, Mika; Määttänen, Niku
  10. Talent Management in a Collectivistic and Egalitarian Context – The Swedish Case By Bolander, Pernilla; Asplund, Kajsa; Werr, Andreas
  11. A Simple Model of Offshore Outsourcing, Technology Upgrading and Welfare By Jaewon Jung; Jean Mercenier
  12. The Margins of Global Sourcing: Theory and Evidence from U.S. Firms By Pol Antràs; Teresa C. Fort; Felix Tintelnot

  1. By: Daniel Montolio (Universitat de Barcelona & IEB); Francesc Trillas (Autonomous University of Barcelona, PPSRC-Iese & IEB); Elisa Trujillo-Baute (Universitat de Barcelona & IEB)
    Abstract: We empirically estimate the effects of regulated access prices and firms’ multinational status on firm performance by using firm, corporate group, and country level information for the European broadband market between 2002 and 2010. Three measures of firm performance are used, namely: market share, turnover and productivity. Special attention is paid to differences in the impact on the performance measures depending on a firm’s position as either a market incumbent or entrant. We find that while access prices have a negative effect on entrants’ market share and turnover, the effect on incumbents’ market share, turnover and productivity is positive. Further, we find that multinational entrants perform better than national entrants in terms of their market share but worse in terms of their turnover and productivity. The opposite is true of incumbent multinationals which perform better than nationals in terms of their turnover and productivity but worse in terms of their market share. This confirms that a firm’s multinational status has a significant impact on its performance, and that this impact differs for incumbents and entrants. Finally, when evaluating the impact of access prices on firm performance at the mean performance of national and multinational firms, we find that the impact of access prices is lower for multinational than for national firms.
    Keywords: Regulation, firm performance, telecommunications, multinational firms
    JEL: L51 L25 L96 F23
    Date: 2014
  2. By: Mitaritonna, Cristina (CEPII, Paris); Orefice, Gianluca (CEPII, Paris); Peri, Giovanni (University of California, Davis)
    Abstract: Immigrants may complement native workers, increase productivity, allow specialization by skill in the firm and lower costs. These effects could be beneficial for the firm and increase its productivity and profits. However not all firms use immigrants. Allowing firms to have differential fixed cost in hiring immigrants we analyze the impact of an increase in local supply of immigrants on firms' immigrant employment and firm's productivity. Using micro-level data on French firms, we show that a supply-driven increase in foreign born workers in a department (location) increases the productivity of firms in that department. We also find that this effect is significantly stronger for firms with initially zero level of foreign employment. Those are also the firms whose share of immigrants increases the most. We also find that the positive productivity effect of immigrants is associated with faster growth of capital and improved export performances of the firms. Finally we find a positive effect of immigration on wages of natives and on specialization of natives in complex occupations, that is common to all firms in the department.
    Keywords: immigrants, firms, productivity, heterogeneity, fixed costs of hiring
    JEL: F22 E25 J61
    Date: 2014–03
  3. By: Backman, Mikaela (Jönköping International Business School, & Centre of Excellence for Science and Innovation Studies (CESIS)); Gabe, Todd (University of Maine); Mellander, Charlotta (Jönköping International Business School, & Centre of Excellence for Science and Innovation Studies (CESIS))
    Abstract: This paper examines the effects of human capital on the growth and survival of a large sample of Swedish businesses. Human capital is represented by conventional measures of the educational attainment and experience of an establishment’s workers, and skills-based measures of the types of occupations present in the company. Controlling for an establishment’s size and age, as well as its industry and region of location, we find that the human capital embodied in a company’s workers significantly affects its performance. The specific effects, however, depend on how human capital is measured and whether the analysis focuses on growth or survival.
    Keywords: Firm growth; firm survival; human capital; education; skills
    JEL: J21 J24 L25
    Date: 2014–03–25
  4. By: Olivier N. Godart; Holger Görg; Aoife Hanley
    Abstract: We explore whether the introduction of trust based working hours is related to the subsequent innovation performance of firms. Employing a panel data set of over 5,000 German establishments, we implement a propensity score matching approach where we only consider firms that did not use trust based work contracts initially. Our results show that firms which adopt such contracts tend to be between 11 to 14 percent more likely to improve products. These results hold when we control for another form of flexible time work arrangements, namely working time accounts. Thus, the positive relationship between the adoption of trust based working hours and innovation seems to be driven by the degree of control and self-management over working days, rather than by merely allowing time flexibility
    Keywords: Trust based work time, innovation, firm performance
    JEL: M1 M5 L2
    Date: 2014–04
  5. By: Christopher Hoag; Kamal Lamsal
    Abstract: In a linear city model of firm location, firms have altruistic objective functions that consist of a linear combination of maximizing profits and producing output, although firms are constrained to earn nonnegative profits. If firms place sufficient weight on maximizing profits, then firms locate at the ends of the linear city, just as in the firm location game under profit maximization. If firms place sufficient weight on producing output, then firms will locate at the median of the linear city, just as in the candidate voting game.
    Keywords: Nonprofit, Linear City
    JEL: L13 L31
    Date: 2014–04
  6. By: Wixe, Sofia (Centre for Entrepreneurship and Spatial Economics (CEnSE), Jönköping International Business School,)
    Abstract: This paper tests the importance of firm level knowledge and neighborhood diversity, as a source for localized knowledge spillovers, on firms propensity to innovate. Diversity is measured in terms of industries as well as employee education and occupation, of which the results show a positive neighborhood effect from diversity in education. In addition, an added positive effect from neighborhood diversity in education is found for firms with a larger share of highly educated employees, which points to the importance of absorptive capacity. However, firm characteristics, such as the knowledge of the own employees, provide to be the strongest determinants for the innovativeness of firms.
    Keywords: Knowledge; neighborhood diversity; education; skills; innovation
    JEL: J21 J24 O31 R32
    Date: 2014–04–03
  7. By: Wagner, Joachim (Leuphana University Lueneburg and CESIS, Stockholm)
    Abstract: This paper uses a tailor-made newly available data set for enterprises from manufacturing industries in Germany to investigate for the first time the links between export diversification over destination countries and goods on the one hand and the profitability of the exporting firms on the other hand. We find that profits tend to be larger in firms with less diversified export sales over goods and in firms with more diversified export sales over destination countries.
    Keywords: Exports; diversification; profitability; Germany
    JEL: F14
    Date: 2014–03–25
  8. By: Thomas J. Miceli (University of Connecticut)
    Abstract: This paper examines markets, firms, and the law as alternative institutional arrangements for organizing transactions that involve transaction-specific investments and uncertain performance. The analysis is the logical extension of Coase’s seminal analysis of the market-firm boundary on one hand, and the market-law boundary on the other. It thus combines insights from the literature on industrial organization and law and economics. The result is a unified framework that reveals the relative advantages and disadvantages, within a fairly simple economic setting, of market exchange, court ordering (contracts), and internal governance (agency).
    Keywords: Asset specificity, contracts, firms, holdup problem, market exchange
    JEL: D23 K12 L14 L22
    Date: 2014–03
  9. By: Maliranta, Mika; Määttänen, Niku
    Abstract: Radical innovations require risk-taking. However, it is hard to find an objective measure for innovation investments that would take riskiness into account. In this paper, we investigate how a simple measure of firms’ innovation investments, namely the employee share of managers and professionals, is associated with profit risk at the firm level. Using data that cover essentially all firms in the Finnish business sector, we first document that labor productivity dispersion is very high among firms with a high employment share of managers and professionals. We also find that the dispersion in the return to firms’ total capital is particularly high among young firms with a high employment share of managers and professionals. We then build a simple model where firms’ innovation activities and firm risk are interrelated. We use the model to analyze how the asymmetric tax treatment of profits and losses in corporate taxation influences firms’ innovation decision in market equilibrium and whether innovation subsidies can improve industry productivity by mitigating such a tax distortion.
    Keywords: productivity, R&D, innovation, corporate taxation
    JEL: E23 L16 O47
    Date: 2014–04–01
  10. By: Bolander, Pernilla (Department of Management); Asplund, Kajsa (Department of Management); Werr, Andreas (Department of Management)
    Abstract: Talent Management (TM) is currently on top of the HR agenda of managers all over the world. Still, TM research and writing has to a large extent been focused on multinational, US-based firms. Recent research has identified a need for empirical research on TM in other national and cultural contexts. The current study focuses on TM practices in the Swedish context which is characterized by collectivistic and egalitarian values at odds with the individualistic and elitist values of TM. Based on a study of 16 organizations, three approaches to TM are identified – a Humanistic approach, a Competitive approach and an Entrepreneurial approach. The three approaches are described and discussed in relation to the organizational and cultural context in which they were identified. Hereby, the paper contributes to a more context-specific understanding of TM, which has been called for in previous research.
    Keywords: Talent Management; HR strategy; Culture
    Date: 2014–03–20
  11. By: Jaewon Jung (THEMA - Théorie économique, modélisation et applications - CNRS : UMR8184 - Université de Cergy Pontoise); Jean Mercenier (ERMES - Equipe de recherche sur les marches, l'emploi et la simulation - CNRS : UMR7017 - Université Paris II - Panthéon-Assas)
    Abstract: We adapt Yeaple's (2005) heterogeneous agents framework to model firms in the North as making explicit offshore outsourcing decisions to cheap-labor economies. Globalization results from a lowering of the set-up costs incurred when engaging in offshore activities. We highlight how firms' technology transformations due to globalization will induce skill upgrading in the North, increase aggregate productivity, average wages and therefore total welfare at the cost of increased wage inequalities. We analytically derive mild conditions under which all consumers--including lower-skilled workers--will nevertheless gain from the surge of offshore outsourcing. A parameterized version of the model roughly calibrated on U.S. data is then numerically explored and confirms our positive welfare predictions.
    Keywords: Offshore outsourcing ; Globalization ; Skill upgrading, Technology upgrading ; Firm heterogeneity
    Date: 2014–03–28
  12. By: Pol Antràs; Teresa C. Fort; Felix Tintelnot
    Abstract: This paper studies the extensive and intensive margins of firms' global sourcing decisions. First, it presents three new facts on U.S. firms' import behavior that highlight the importance of the extensive margin in explaining cross-sectional variation in U.S. import volumes. These facts motivate the development of a quantifiable multi-country global sourcing model with heterogeneous firms, in which firms self-select into importing based on their productivity and country-specific variables (wages, trade costs, and technology). The model delivers a simple closed-form solution for firm profits as a function of the number and characteristics of the set of countries from which a firm has invested in being able to import. A key feature of this derived profit function is that the marginal increase in profits from adding a country to the firm's set of potential sourcing locations depends on the number and characteristics of other countries in the set. This makes the analysis of the extensive margin of sourcing more complicated than in models of exporting, where entry is typically assumed to be independent across markets. Under plausible parametric restrictions, however, selection into importing features complementarity across markets. In this case, we can use standard monotone comparative statics techniques to show that the sourcing strategies of firms follow a strict hierarchical structure, as in exporting models. In our empirical implementation of the model, we also exploit these complementarities to develop an algorithm, similar to Jia (2008), to feasibly estimate the fixed costs of sourcing from different countries.
    Date: 2014–01

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