nep-bec New Economics Papers
on Business Economics
Issue of 2015‒01‒19
ten papers chosen by
Vasileios Bougioukos
Bangor University

  1. Inflation dynamics in a model with firm entry and (some) heterogeneity By Javier Andrés; Pablo Burriel
  2. Betting on exports: Trade and endogenous heterogeneity By Alessandra Bonfiglioli; Gino Gancia
  3. Should the host economy invest in a new industry? The roles of FDI spillovers, development level, and heterogeneity of firms. By Huu Thanh Tam Nguyen; Ngoc-Sang Pham
  4. Enterprise productivity: a three-speed Europe By Dall'Olio, Andrea; Iootty, Mariana; Kanehira, Naoto; Saliola, Federica
  5. Uncovering Recruitment as a Strategic Lever for Various Forms of Organizational Capital By Demir, Robert; Löwstedt, Jan; Tienari, Janne
  6. Environmental Management Systems – Does Certification Pay? By Manuel Frondel; Karoline Krätschell; Lina Zwick
  8. Productivity Sorting and Mode of Export By Marco Grazzi; Chiara Tomasi
  9. Harmonization versus Mutual Recognition: Some pitfalls for the coordination of product standards under imperfect competition By Jørgensen, Jan Guldager; Schröder, Philipp J.H.
  10. DOES R&D PROTECT SMES FROM THE HARDNESS OF THE CYCLE? EVIDENCE FROM SPANISH SMES (1990-2009) By Dolores Añón Higón; Miguel Manjón; Juan A. Máñez; Juan A. Sanchis-Llopis

  1. By: Javier Andrés (University of Valencia); Pablo Burriel (Banco de España)
    Abstract: We analyse the incidence of endogenous entry and firm TFP-heterogeneity on the response of aggregate inflation to exogenous shocks. We build up an otherwise standard DSGE model in which the number of firms is endogenously determined and firms differ in their steady state level of productivity. This splits the industry structure into firms of different sizes. Calibrating the different transition rates, across firm sizes and out of the market we reproduce the main features of the distribution of firms in Spain. We then compare the inflation response to technology, interest rate and entry cost shocks, among others. We find that structures in which large (more productive) firms predominate tend to deliver more muted inflation responses to exogenous shocks.
    Keywords: firm dynamics, industrial structure, inflation, business cycles.
    JEL: E31 E32 L11 L16
    Date: 2014–12
  2. By: Alessandra Bonfiglioli; Gino Gancia
    Abstract: We study the equilibrium determinants of firm-level heterogeneity in a model in which firms can choose between different probability distributions when drawing productivity at the entry stage and explore the implications in closed and open economy. One novel result is that export opportunities, by increasing payoffs in the tail, induce firms to draw technology from riskier distributions. When more productive firms also pay higher wages, trade amplifies wage dispersion by inducing firms to take more risk ex-ante and hence making them more unequal ex-post. Our model is consistent with new evidence on how firm-level heterogeneity varies across U.S. industries.
    Keywords: Firm Heterogeneity, Productivity Dispersion, Wage Inequality, International Trade.
    JEL: F12 F16 E24
    Date: 2014–12
  3. By: Huu Thanh Tam Nguyen (EPEE - Université d'Evry Val d'Essonne); Ngoc-Sang Pham (Centre d'Economie de la Sorbonne)
    Abstract: We consider a small open economy with two productive sectors (an old and a new). There are two types of firms in the new industry: a well planted multinational firm and a potential domestic firm. Our framework highlights a number of results. First, in a poor country with low return of training and weak FDI spillovers, the domestic firm does not exist in the new industry requiring a high fixed cost. Second, once the host economy has the capacity to create the new firm, the productivity of the domestic firm is the key factor allowing it to enter into the new industry, and even eliminate the multinational firm. Interestingly, in some cases where FDI spillovers are strong, the country should invest in the new industry, but not train specific workers. Last, credit constraints and labor/capital shares play important roles in the competition between the multinational firm and the domestic one.
    Keywords: FDI spillovers, investment in training, heterogeneous firms, entry cost.
    JEL: F23 F4 O3
    Date: 2014–10
  4. By: Dall'Olio, Andrea; Iootty, Mariana; Kanehira, Naoto; Saliola, Federica
    Abstract: Between 2003 and 2008 productivity patterns diverged between the fast growing, newest members of the European Union and the slower paced, elder ones – as would be expected. However, there are also striking divergences within the latter group, with productivity in Southern Europe going into reverse. This paper analyzes which factors - whether countrylevel or firm-specific ones - contributed more to the emergence of a three-speed Europe. The analysis combines firm-level data with country-level inputs. Among the newest members of the European Union, country characteristics including the stock of inward foreign direct investment, the availability of credit, and the quality of the business environment and the skills of the workforce prove to be the most important drivers. Firm specific characteristics are shown to matter as well, notably that small firms and firms which are part of international groups realize more productivity gains than larger domestic competitors. Among the more advanced member countries, firm-level characteristics are most important, with larger firms and firms with international affiliation demonstrating faster productivity gains. Country specific factors, such as the quality of the business environment, the size of outward FDI and the skills of the workforce, do matter as well. These explanations of diverging productivity patterns suggest that European Union nations can realize significant benefits from low cost policy interventions such as improving business regulations and encouraging firms’ internationalization. JEL Classification: D22, H11, O47, O52
    Keywords: doing business, European Union, firm characteristics, firm performance, foreign direct investment, global value chains, productivity, regulation
    Date: 2014–12
  5. By: Demir, Robert (Ratio); Löwstedt, Jan (Stockholm University School of Business); Tienari, Janne (Aalto University and Stockholm University School of Business)
    Abstract: Whereas the structuring and growth of the firm have long been central to conceptual development in strategy research, the literature has largely ignored how a fundamental practice such as recruitment can be of strategic importance for the sustenance of the firm’s growth. The present study introduces recruitment as a strategic practice and elaborates on how this practice is crucial in creating and editing social and economic capital of the firm and how this interplays with its growth. It suggests three entrenchments – vertical, horizontal, and lateral – for striking a balance between the firm’s explorative (diversification) and exploitative (specialization) activities for creating and modifying its competence base through strategic recruitment.
    Keywords: Recruitment; Strategy; Practice; Growth; Capital; Exploration; Exploitation
    JEL: M12 M14
    Date: 2014–12–29
  6. By: Manuel Frondel; Karoline Krätschell; Lina Zwick
    Abstract: The voluntary adoption of environmental management systems (EMS), frequently certified by third-party audits following international standards, has become a vital supplement to mandatory environmental policies based on regulation and legislation. Although there is empirical evidence that both EMS adoption and certification can effectively improve firms’ environmental performance, the impact on their business performance is far from clear. Drawing upon an OECD survey including more than 4,000 manufacturing facilities, this paper fills this void by estimating the impact of both EMS adoption and certification on facilities’ business performance using statistical matching techniques. While our results indicate that the pure adoption of EMS without any certification does not enhance facilities’ business performance, the financial performance of certified facilities turns out to be significantly high.
    Keywords: Environmental regulation; matching method
    JEL: O33 O38 Q28
    Date: 2014–11
  7. By: Natasa Stojkoviæ Krstiæ, (Postal Savings Bank, Belgrade)
    Abstract: Business performance measurement plays a special role in improving the quality of decision-making and increasing overall business efficiency. Performance measurement provides the information about the state of an organization as a system, and on that basis, in the future, set realistic goals which will be challenging and stimulating. Without an objective, comprehensive, regular measurement of business performances, an organization would lose vital information for a continuous stream of business management decision making, without which there is no effective management (planning, organizing, leading and controlling). From the above mentioned, the importance of developing new, modern performance measurement system is gone, which should to overcome the disadvantages of the traditional financial measurement system, which is based solely on financial measures of performances. The aim of this paper is to highlight the characteristics of modern business performance measurement framework and presents only some of them. Introducing these new concepts and their effective implementation in organizations is in a function of the increasing the business efficiency.
    Keywords: measurement, performance, organization.
    JEL: M11 M21 O31
    Date: 2014–09
  8. By: Marco Grazzi; Chiara Tomasi
    Abstract: This paper investigates the relation between firms' productivity and exporting behavior in presence of export intermediaries. Using a cross section of firm-level data for several advanced and developing economies, the study confirms the productivity-sorting prediction according to which domestic firms are less efficient than those resorting to an export intermediary, while the latter are less productive than producers which export directly. Our novel finding is that firms' productivity has a stronger effect on the probability of exporting directly than on the likelihood of exporting indirectly. This suggests for a stronger role of intermediaries in granting foreign market access to a large proportion of small and less productive firms.
    Keywords: heterogeneous firms, international trade, direct and indirect exports intermediation
    Date: 2014–12–19
  9. By: Jørgensen, Jan Guldager (Department of Business and Economics); Schröder, Philipp J.H. (Aarhus University)
    Abstract: The present paper examines trade liberalization driven by the coordination of product standards. For oligopolistic firms situated in separate markets that are initially sheltered by national standards, mutual recognition of standards implies entry and reduced profits at home paired with the opportunity to start export sales. In contrast, harmonization, in particular the prospect that one's own national (but not the foreign) standard becomes the only globally accepted standard, opens the foreign market without balancing entry at home. We study these scenarios in a reduced form lobby game with two countries and three firms, where firms first lobby for the policy coordination regime (harmonization versus mutual recognition), and subsequently, in case of harmonization, the global standard is auctioned among the firms. We discuss welfare effects and conclude with policy implications. In particular, harmonized standards may fail to harvest the full pro-competitive effects from trade liberalization compared to mutual recognition; moreover, the issue is most pronounced in markets featuring price competition.
    Keywords: Standard regimes; harmonization; technical trade barriers; NTBs; Cournot competition; Bertrand competition
    JEL: F12 F13 F15
    Date: 2014–12–21
  10. By: Dolores Añón Higón (Department of Applied Economics II and ERICES, Universitat de València); Miguel Manjón (QURE-CREIP Department of Economics, Universitat Rovira i Virgili); Juan A. Máñez (Department of Applied Economics II and ERICES, Universitat de València); Juan A. Sanchis-Llopis (Department of Applied Economics II and ERICES, Universitat de València)
    Abstract: This paper analyses whether undertaking R&D activities allows SMEs to attenuate the negative impact of recessions on productivity. In contrast to other studies we use a firm level indicator of the cycle based on firms’ own perceptions, while total factor productivity is obtained using a control function methodology in which we recognise the potential role that R&D experience might have in shaping future firms’ productivity. The analysis is performed using a representative sample of Spanish SMEs for the period 1990-2009. Results show both that R&D activities render positive productivity returns, and that performing R&D helps to alleviate the negative effects of downturns on productivity. Additionally, R&D seems to have a countercyclical effect upon SME’s productivity over the business cycle, as we find that SMEs R&D productivity premium in recessions doubles that of expansions.
    Keywords: TFP, business cycle, R&D
    Date: 2014–12

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