nep-bec New Economics Papers
on Business Economics
Issue of 2015‒04‒19
fourteen papers chosen by
Vasileios Bougioukos
Bangor University

  1. A Bertrand-Edgeworth oligopoly with a public firm By Rácz, Zoltán; Tasnádi, Attila
  2. Production Networks, Geography and Firm Performance By Andrew B. Bernard; Andreas Moxnes; Yukiko U. Saito
  3. Why Was Japan Left Behind in the ICT Revolution? By FUKAO Kyoji; IKEUCHI Kenta; YoungGak KIM; KWON Hyeog Ug
  4. Sub-National Institutions and Firm Survival in Vietnam By Doan, Quang Hung; Vu, Hoang Nam; Dao, Ngoc Tien
  5. Role of Clusters and Certification in the Internationalization of Offshoring Service Providers from Emerging Markets: A Study of Indian IT firms By Upadhyayula, Rajesh; Karthik, D.; Karna, Amit
  6. Firm Leverage and Unemployment during the Great Recession By Giroud, Xavier; Mueller, Holger M
  7. Foreign exposure and heterogeneous performance of Italian firms: A survey of the empirical literature (1992-2014) By Valeria Gattai
  8. Endogenous Firms' Exit, Inefficient Banks and Business Cycle Dynamics By Lorenza Rossi
  9. International Diversification and Firm Performance: The contingent influence of Product Diversification By Karthik, D.; George, Rejie; Singla, Chitra
  10. Firm-Level Early Intervention Incentives: Which Recent Employers of Disability Program Entrants Would Pay More? By David C. Stapleton; David R. Mann; Jae Song
  11. Moving People with Ideas - Innovation, Inter-regional Mobility and Firm Heterogeneity By Riccardo Crescenzi; Luisa Gagliardi
  12. Intellectual Property Rights and appropriability of innovation capital: evidence from Polish manufacturing firms By Tomasz Kijek
  13. Evidence on Wind Farm Performance Decline in the UK By Green, RJ; Staffell, I
  14. Does the Outsourcing Affect Labour Costs in Enterprises? Evidence from Firm-level Data By Anna Grzes

  1. By: Rácz, Zoltán; Tasnádi, Attila
    Abstract: We determine conditions under which a pure-strategy equilibrium of a mixed Bertrand-Edgeworth oligopoly exists. In addition, we determine its pure-strategy equilibrium whenever it exists and compare the equilibrium outcome with that of the standard Bertrand-Edgeworth oligopoly with only private firms.
    Keywords: Bertrand-Edgeworth, mixed oligopoly
    JEL: D43 L13
    Date: 2015–04–07
  2. By: Andrew B. Bernard; Andreas Moxnes; Yukiko U. Saito
    Abstract: This paper examines the importance of buyer-supplier relationships, geography and the structure of the production network in firm performance. We develop a simple model where firms can outsource tasks and search for suppliers in different locations. Low search and outsourcing costs lead firms to search more and find better suppliers. This in turn drives down the firm's marginal production costs. We test the theory by exploiting the opening of a high-speed (Shinkansen) train line in Japan which lowered the cost of passenger travel but left shipping costs unchanged. Using an exhaustive dataset on firms' buyer-seller linkages, we find significant improvements in firm performance as well as creation of new buyer-seller links, consistent with the model.
    JEL: D22 D85 F14 L10 L14 R12
    Date: 2015–04
  3. By: FUKAO Kyoji; IKEUCHI Kenta; YoungGak KIM; KWON Hyeog Ug
    Abstract: In this paper, we investigate why information and communication technology (ICT) investment in Japan has stagnated since the 1990s. Given that a notable characteristic of Japan's economy is that small as well as older firms play a much greater role than in other economies, particularly that of the United States, and that previous studies on other countries suggest that larger and younger firms are more likely to adopt new ICT technologies, our analysis mainly focused on firms' size and age.As the first step of our investigation, using firm-level data, we examined whether larger and/or younger firms tend to have a higher ICT intensity. We found that larger firms indeed have a higher ICT intensity. In the case of firm age, there was no simple linear relationship between firm age and ICT intensity. As a next step, we estimated a Cobb-Douglas type production function and tested whether the ICT input coefficient differs across different firm-size groups and firm-age groups. We found that larger firms and younger firms tend to have a higher ICT input coefficient. The other factor that may be responsible for the differences in ICT intensity by firm size and firm age is the constraints on ICT input. To confirm this, we calculated the marginal product of ICT input by firm-size group and by firm-age group using the production function estimates. We found that smaller firms and younger firms tend to have a higher marginal product of ICT input. These findings suggest that smaller firms and younger firms face constraints that prevent them from increasing ICT input.Next, we examined impediments to the full use of ICT by Japanese firms based on our analysis as well as preceding studies by the Japanese government and other Japanese institutions. As factors which may result in smaller firms in Japan facing a higher price for ICT inputs, we pointed out two characteristics of the Japanese economy: the underdeveloped market for business process outsourcing (BPO) and the scarcity of ICT experts. Since access to efficient vendors of ICT services is a key factor for smaller firms' procuring ICT input at a reasonable price and ICT experts in Japan tend to prefer working in large firms, these two factors make ICT input more expensive for smaller firms. On the other hand, as constraints to increasing ICT input for smaller and/or younger firms, we pointed out liquidity constraints and insufficient ICT literacy. We also pointed out a number of other special factors which help to explain why not only the ICT intensity of small firms but also that of all firms in Japan is comparatively low.
    Date: 2015–04
  4. By: Doan, Quang Hung; Vu, Hoang Nam; Dao, Ngoc Tien
    Abstract: By combining two sets of survey data - provincial competitiveness index (PCI) from VNCI-VCCI and USAID and annual enterprise census from Vietnam General Statistics Office (GSO) for the period between 2005 and 2011, we estimate the effects of sub-national institutions measured by Provincial Competitiveness Index on firm survival in Vietnam. Our results show that sub-national institutions have a positive effect on firm’s survival in both short-run and long-run. The effect, however, diminishes over time, indicating that newly entered firms are more likely to survive.
    Keywords: Firm survival, Vietnam, Manufacturing, Provincial Competitiveness Index
    JEL: D2 L1 O17
    Date: 2013–06
  5. By: Upadhyayula, Rajesh; Karthik, D.; Karna, Amit
    Abstract: We adopt a resource-based view to investigate the drivers of internationalization of emerging market offshoring service providers (OSPs). Using data from Indian IT firms between 1992 and 2002, we investigate the effect of cluster presence and quality certification on OSP internationalization and in moderating the internationalization-performance relationship. Our findings contribute to the OSP literature by proposing a significant role for clustering and certification. We find a positive effect of certification on OSP internationalization. Although certification contributes negatively to OSP performance, it positively moderates the performance effect of OSP internationalization. Cluster presence was found to drive OSP’s overall performance.
  6. By: Giroud, Xavier; Mueller, Holger M
    Abstract: We argue that firms’ balance sheets were instrumental in the propagation of shocks during the Great Recession. Using establishment-level data, we show that firms that tightened their debt capacity in the run-up (“high-leverage firms”) exhibit a significantly larger decline in employment in response to household demand shocks than firms that freed up debt capacity (“low-leverage firms”). In fact, all of the job losses associated with falling house prices during the Great Recession are concentrated among establishments of high-leverage firms. At the county level, we find that counties with a larger fraction of establishments belonging to high-leverage firms exhibit a significantly larger decline in employment in response to household demand shocks. Thus, firms’ balance sheets also matter for aggregate employment.
    Keywords: financial accelerator; firm balance sheet channel; leverage; unemployment
    JEL: E24 E32 G32 R3
    Date: 2015–04
  7. By: Valeria Gattai
    Abstract: This paper surveys 67 contributions on internationalisation and performance of Italian enterprises. It covers empirical studies (including working papers), published between 1992 and 2014, taking a microeconomic perspective and analysing the potential links between firms’ global involvement and heterogeneity in economic, human capital and innovation and financial measures. The discussion is organised in an intuitive and non-technical way. At the same time, we devote particular attention to studying the different papers from many points of view, including their internationalisation measures, performance indicators, empirical approach, causality and results.
    Keywords: Internationalisation, Performance, Italy, Firm-level data, Survey
    JEL: F1 F2 L2
    Date: 2015–04
  8. By: Lorenza Rossi (Department of Economics and Management, University of Pavia)
    Abstract: I consider a NK-DSGE model with endogenous …firms' exit and entry together with a monopolistic competitive banking sector, where defaulting …firms do not repay loans to banks. I show that the exit margin is an important shock trans- mission channel. It implies: i) an endogenous countercyclical number of fi…rms destruction; ii) an endogenous countercyclical bank markup and spread. The interaction between i) and ii) generates a stronger propagation mechanism with respect to a model with efficient banks. Compared to a model with exogenous exit the model generates a correlation between output and …firms'entry closer to the data.
    Keywords: firms' endogenous exit, …firms dynamics, monopolistic banking, inefficient …financial markets, countercyclical bank markup, interest rate spread.
    JEL: E32 E44 E52 E58
    Date: 2015–03
  9. By: Karthik, D.; George, Rejie; Singla, Chitra
    Abstract: Despite decades of research, the relationship between international diversification (ID) and performance (P) represents a quandary in the field of International Business.. Though, there seems to be some consensus among scholars on the non-linear nature of the relationship; researchers in the field continue to urge further work in the field for a more nuanced approach to study this relationship. This paper takes a step forward to address that call by arguing that the underlying relationship between ID and P is contingent upon product diversification (PD) of the firm. In particular, we hypothesize and provide evidence that the ID and P relationship is positively moderated by PD when the firm has both high levels of both ID and PD or low levels of both ID and PD.
  10. By: David C. Stapleton; David R. Mann; Jae Song
    Keywords: Early Intervention Incentives, Employers, Disability Program Entrants
    JEL: I J
    Date: 2015–03–18
  11. By: Riccardo Crescenzi; Luisa Gagliardi
    Abstract: This paper looks at the link between inter-regional mobility, innovation and firms' behavioural heterogeneity in their reliance on localised external sources of knowledge. By linking patent data (capturing inventors' inter-regional mobility) with firm-level data (providing information on firms' innovation inputs and behaviour) a robust identification strategy makes it possible to shed new light on the geographical mobility-innovation nexus. The analysis of English firms suggests that firm-level heterogeneity - largely overlooked in previous studies - is the key to explain the innovation impact of inter-regional mobility over and above learning-by-hiring mechanisms. A causal link between inflows of new inventors into the local labour market and innovation emerges only for firms that make the use of external knowledge sources an integral part of their innovation strategies.
    Keywords: Innovation, Labour Mobility, Inter-regional Migration, Spillovers
    JEL: O31 O15 J61 R23
    Date: 2015–04
  12. By: Tomasz Kijek (University of Life Sciences in Lublin)
    Abstract: This paper tries to find how firms use IPRs in the form of patents to protect innovation capital and find determinants of their effectiveness. The research is based on a large sample of 2960 Polish manufacturing firms that were engaged in developing and/or implementing a product or process innovation in the years 2010-2012. Besides descriptive statistics which show firms’ attitudes toward the effectiveness of patents and their determinants, I apply the knowledge production functionto find a link between patent propensity, R&D and innovation performance. Descriptive analyses show that Polish manufacturing firms rarely use patents as the appropriability mechanism which results in the low level of their perceived effectiveness. It also turns out that the perceived effectiveness of a patent depends on a firm’s size, theinnovation type and technological opportunities. In turn, the results of the knowledge production function estimationallow me to conclude that an increase in patent propensity affects the firm’s innovation performancepositively.
    Keywords: innovation capital;appropriability mechanism; intellectual property rights;patent;knowledge production function
    JEL: O31 O34
    Date: 2015–04
  13. By: Green, RJ; Staffell, I
    Date: 2015–04–09
  14. By: Anna Grzes (University of Bialystok)
    Abstract: This empirical paper examines an impact of materials and services outsourcing on labour costs in two groups: industrial and construction enterprises, and services enterprises in Poland in the period 2005-2013. The analysis of this dependence was based on data of Central Statistical Office included in financial statement F-01/I-01. The preliminary analysis and econometric model showed that Polish industrial and construction, and service enterprises applied both types of outsourcing, but services outsourcing had more important effect on labour costs than materials outsourcing. However, the depreciation cost understood as technological progress had the biggest impact on labour costs, especially in industrial and construction firms.
    Keywords: cost; materials outsourcing, services outsourcing; Poland
    JEL: J30 L24 L60 L80
    Date: 2015–04

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