nep-bec New Economics Papers
on Business Economics
Issue of 2014‒10‒13
twelve papers chosen by
Vasileios Bougioukos
Bangor University

  1. Owner-management, firm age and productivity in Italian family firms By Marco Cucculelli; Lidia Mannarino; Valeria Pupo; Fernanda Ricotta
  2. A note on firm age and the margins of imports: First evidence from Germany By Joachim Wagner
  3. Heterogeneous Tax Sensitivity of Firm-level Investments By Egger, Peter; Erhardt, Katharina; Keuschnigg, Christian
  4. CSR in an Asymmetric Duopoly with Environmental Externalities By Luca Lambertini; Arsen Palestini; Alessandro Tampieri
  5. A Risk Map of Markups: Why We Observe Mixed Behaviors of Markups By Seong-Hoon Kim; Seongman Moon
  6. Newborn Health and the Business Cycle By Ainhoa Aparicio
  7. Better Together? Retail Chain Performance Dynamics in Store Expansion Before and After Mergers By Mitsukuni Nishida; Nathan Yang
  8. Optimal incentive contracts to avert firm relocation By Pollrich, Martin; Schmidt, Robert C.
  9. Firms' Size and Productivity in Spain: a Stochastic Frontier Analysis By Rosario Sanchez; Maria Angeles Diaz
  10. Locational Determinants of Foreign Investment Firms in Turkey By Sevkiye Sence Turk; Lale Berkoz
  11. A results-based incentive scheme to improve performance By Ana María Becerra; Juan F. Castro; Gustavo Yamada
  12. Financial Institutions' Efforts to Support the Business Conditions of Small and Medium-Sized Firms: Intermediation Services Utilizing Corporate Information and Customer Networks By Atsushi Ishikawa; Saiki Tsuchiya; Shinichi Nishioka

  1. By: Marco Cucculelli (Universit… Politecnica delle Marche, Dipartimento di Scienze economiche e sociali); Lidia Mannarino (University of Calabria, Department of Economics and Statistics); Valeria Pupo (University of Calabria, Department of Economics and Statistics); Fernanda Ricotta (University of Calabria, Department of Economics and Statistics)
    Abstract: Using Total Factor Productivity (TFP) as a measure of corporate performance, we find that Italian family-run firms are less productive than firms run by outside managers and the result is robust to potential endogeneity of management regime. This difference tends to vanish when the age of the firms is taken into account.
    Keywords: Family firms, Management, TFP
    JEL: D24 G34
    Date: 2014–09
  2. By: Joachim Wagner (Leuphana University Lueneburg, Germany)
    Abstract: This note uses a new tailor-made data set to investigate the link between firm age and the extensive margins of imports empirically for the first time for Germany. Results turn out to be fully in line with the theoretical considerations. Older firms are more often importers, import more different goods, and import from more different countries of origin.
    Keywords: Imports, firm age, import margins, Germany
    JEL: F14
    Date: 2014–08
  3. By: Egger, Peter (ETH Zuerich); Erhardt, Katharina (ETH Zuerich); Keuschnigg, Christian (Institute for Advanced Studies, Vienna and University of St. Gallen)
    Abstract: Firms are heterogeneous in size, productivity, ownership concentration, governance, financial structure and other dimensions. This paper introduces a stylized theoretical framework to account for such differences and to explain the heterogeneous tax sensitivity of firm-level investments across firm types. We econometrically test the theoretical predictions, taking account of selection of firms into different regimes. We find important differences in the tax sensitivity of investment of small entrepreneurial and larger managerial firms in different financial regimes that are largely in line with theoretical results.
    Keywords: Corporate tax, personal taxes, firm heterogeneity, access to capital, manager-shareholder conflicts
    JEL: D22 G32 H25 L21
    Date: 2014–09
  4. By: Luca Lambertini (Department of Economics, University of Bologna); Arsen Palestini (MEMOTEF, Sappienza university of Rome); Alessandro Tampieri (CREA, Université de Luxembourg)
    Abstract: We investigate a linear state differential game describing an asymmetric Cournot duo- poly with capacity accumulation à la Ramsey and a negative environmental externality (pollution), in which one of the firms has adopted corporate social responsibility (CSR) in its statute, and therefore includes consumer surplus and the environmental effects of production in its objective function. If the market is sufficiently large, the CSR firm sells more, accumulates more capital and earns higher profits than its profit-seeking rival.
    Keywords: Capital accumulation, asymmetric duopoly, dynamic games
    JEL: C73 H23 L13 O31
    Date: 2014
  5. By: Seong-Hoon Kim (University of St Andrews); Seongman Moon (Universidad Carlos III de Madrid)
    Abstract: This paper proposes an explanation for mixed evidence on the behaviors of markups. The key mechanism consists of two complementary channels of risk internalization that arise when firms face uninsurable business risks. One channel is based on passive risk consideration, through which firms raise prices to abide by riskier business thereby associating higher production with higher prices. The other channel is based on active risk management, through which firms lower prices to handle riskier business thereby associating higher production with lower prices. The relative responsiveness of the two channels to a shock depends on each firm’s fundamental characteristics and leads to a sharp division of markup cyclicality across sectors.
    Keywords: markups, risk internalization, technology, market power, cost channel, hedging channel
    JEL: D21 E32
    Date: 2013–12–01
  6. By: Ainhoa Aparicio
    Date: 2014–02
  7. By: Mitsukuni Nishida (Johns Hopkins Carey Business School); Nathan Yang (Yale School of Management)
    Abstract: We study firm performance dynamics in retail growth using a dynamic model of expansion that allow these dynamics to operate through an unobserved serially correlated process. The model is estimated with data on convenience-store chain diffusion across Japanese prefectures from 1982 to 2012, whereby an actual merger between two chains takes place in 2001. Given the presence of serial correlation and selection biases in observed revenue, we combine particle filtering methods for dynamic games with control functions in revenue regressions. The estimated structural model provides us insights about how performance dynamics evolve before and after the merger. In particular, we demonstrate that the performance dynamics for the merged entity do not improve following the merger.
    Keywords: Dynamic discrete choice; Firm size spillovers; Industry dynamics; Learning-by-doing; Market Concentration; Merger analysis; Particle filter; Revenue regression; Serial correlation
    JEL: L10 L25 L81 G34
    Date: 2014–09
  8. By: Pollrich, Martin; Schmidt, Robert C.
    Abstract: A unilateral policy intervention by a country (such as the introduction of an emission price) can induce firms to relocate to other countries. We analyze a dynamic game where a regulator offers contracts to avert relocation of a firm in each of two periods. The firm can undertake a location-specific investment (e.g., in abatement capital). Contracts can be written on some contractible productive activity (e.g., emissions), but the firm's investment is not contractible. A moral hazard problem arises under short-term contracting that makes it impossible to implement outcomes with positive transfers in the second period. The regulator resorts to high-powered incentives in the first period. The firm then overinvests and a lock-in effect prevents relocation in both periods. Paradoxically, the distortion in the firstperiod contract can be so severe that higher transfers are needed to avert relocation compared to a (hypothetical) situation without the investment opportunity.
    Keywords: moral hazard; contract theory; limited commitment; firm mobility; abatement capital
    JEL: D82 D86 L51 Q58
    Date: 2014–09–16
  9. By: Rosario Sanchez; Maria Angeles Diaz
  10. By: Sevkiye Sence Turk; Lale Berkoz
  11. By: Ana María Becerra (Departamento de Economía, Universidad del Pacífico); Juan F. Castro (Departamento de Economía, Universidad del Pacífico); Gustavo Yamada (Departamento de Economía, Universidad del Pacífico)
    Abstract: A qualified and motivated pool of professors and researchers is a key input in any successful higher education endeavor (Salmi, 2009). Hiring professors with adequate qualifications is, of course, part of the answer to achieve this. However, improving the competitiveness of a university from within, and when the academic career has been historically based on age rather than on merit, is a much more difficult task. We believe a simple and transparent results-based incentive scheme can help reshape academic performance. Universidad del Pacífico, a medium size not for profit private institution specialized in economics and business fields, launched in 2007, an incentive system with these characteristics (Universidad del Pacífico, 2008). Monetary bonuses and promotions are linked to a set of results indicators, each having a particular weight which reflects university’s priorities regarding teaching skills and research accomplishments and dissemination. We describe this incentive system, briefly discuss the internal “politics” of its approval and implementation, and assess its potential effects on academic performance after 5 years of continuous operation.
    Keywords: Results-based, Incentive, Scheme, Improve, Performance, Professor, Researcher, Higher, Education
    JEL: D23 D82 D86
    Date: 2014–06
  12. By: Atsushi Ishikawa (Bank of Japan); Saiki Tsuchiya (Bank of Japan); Shinichi Nishioka (Bank of Japan)
    Abstract: Financial institutions have been stepping up their efforts to support the business conditions of small and medium-sized firms. They have long supported the business conditions of such firms through financing, but these firms also face a wide range of management challenges other than financing. To resolve the issues faced by these firms, financial institutions have been providing support for the exploration of new markets such as business matching and the business succession of firms with elderly owners. These services have an important feature, in that financial institutions intermediate a range of information to their borrowing firms, utilizing corporate information and customer networks attained through their lending operations. Moreover, some financial institutions have recently begun to enhance the quality of their services by expanding their networks through cooperation with other financial institutions at home and abroad and with related groups.
    Date: 2013–01–11

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