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on Business Economics |
| By: | Carvalho, Vasco M; Grassi, Basile |
| Abstract: | Do large firm dynamics drive the business cycle? We answer this question by developing a quantitative theory of aggregate fluctuations caused by firm-level disturbances alone. We show that a standard heterogeneous firm dynamics setup already contains in it a theory of the business cycle, without appealing to aggregate shocks. We offer a complete analytical characterization of the law of motion of the aggregate state in this class of models – the firm size distribution – and show that the resulting closed form solutions for aggregate output and productivity dynamics display: (i) persistence, (ii) volatility and (iii) time-varying second moments. We explore the key role of moments of the firm size distribution – and, in particular, the role of large firm dynamics – in shaping aggregate fluctuations, theoretically, quantitatively and in the data. |
| Keywords: | aggregate fluctuations; firm size distribution; large firm dynamics; random growth |
| JEL: | E32 L11 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10587&r=bec |
| By: | Shohei Yoshida |
| Abstract: | The paper investigates how competition between two multiproduct downstream firms in vertical relationships affects horizontal relationships: competitor collaboration and performance difference. When the upstream market consists of exclusive suppliers, the efficient firm may have incentive for technology transfer without any payment to its less efficient rival, which can be a credible device of the efficient firm to enlarge its more profitable product. Moreover, such technology transfer enhances both consumer surplus and social welfare. The inefficient downstream firm may earn more than the efficient firm under upstream markets with exclusive suppliers and with discriminatory monopolist. |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:0935&r=bec |
| By: | Antoine Berthou (Banque de France); Emmanuel Dhyne (National Bank of Belgium); Matteo Bugamelli (Banca d’Italia); Ana-Maria Cazacu (Banca Nationala a României); Calin-Vlad Demian (European Central Bank); Peter Harasztosi (Magyar Nemzeti Bank); Tibor Lalinsky (Národná banka Slovenska); Jaanika Meriküll (Eesti Pank); Filippo Oropallo (ISTAT); Ana Cristina Soares (Banco de Portugal) |
| Abstract: | This paper provides a new cross-country evaluation of competitiveness, focusing on the linkages between productivity and export performance among European economies. We use the information compiled in the Trade module of CompNet to establish new stylized facts regarding the joint distributions of the firm-level exports performance and productivity in a panel of 15 countries, 23 manufacturing sectors during the 2000’s. We confirm that exporters are more productive than nonexporters. However, this productivity premium is rising with the export experience of firms, with permanent exporters being much more productive than starters. At the intensive margin, we show that both the level and the growth of firm-level exports rise with firm productivity, and that the bulk of aggregate exports in each country are made by a small number of highly productive firms. Finally, we show that during the crisis, the growth of exports by high productive firms sustained the current account adjustment of European “stressed” economies. This last result confirms that the shape of the productivity distribution within each country can have important consequences from the point of view of the dynamics of aggregate trade patterns. |
| Keywords: | Firm-level exports, productivity, firm heterogeneity |
| JEL: | F10 F14 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbb:reswpp:201505-282&r=bec |
| By: | Craig Doidge; G. Andrew Karolyi; René M. Stulz |
| Abstract: | The U.S. had 14% fewer exchange-listed firms in 2012 than in 1975. Relative to other countries, the U.S. now has abnormally few listed firms given its level of development and the quality of its institutions. We call this the “U.S. listing gap” and investigate possible explanations for it. We rule out industry changes, changes in listing requirements, and the reforms of the early 2000s as explanations for the gap. We show that the probability that a firm is listed has fallen since the listing peak in 1996 for all firm size categories though more so for smaller firms. From 1997 to the end of our sample period in 2012, the new list rate is low and the delist rate is high compared to U.S. history and to other countries. High delists account for roughly 46% of the listing gap and low new lists for 54%. The high delist rate is explained by an unusually high rate of acquisitions of publicly-listed firms compared to previous U.S. history and to other countries. |
| JEL: | G15 G20 G24 G30 G34 G38 O16 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21181&r=bec |
| By: | Fafchamps, Marcel; Woodruff, Christopher |
| Abstract: | We conduct a business plan competition to test whether survey instruments or panel judges are able to identify the fastest growing firms. Participants submitted six- to eight-page business plans and defended them before a three- or four-judge panel. We surveyed applicants shortly after they applied, and one and two years after the competition. We use follow-up surveys to construct measures of enterprise growth potential. We find that a measure of ability correlates strongly with future growth, but that panel scores add to predictive power even after controlling for ability and other survey variables. The survey questions have more power to explain the variance in growth. Participants presenting before the panel were given a chance to win customized management training. Fourteen months after the training, we find no positive effect of the training on growth of the business. |
| Keywords: | business plan competitions; firm growth; high growth entrepreneurship |
| JEL: | J24 L26 O1 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10597&r=bec |
| By: | Noriaki Matsushima; Laixun Zhao |
| Abstract: | This paper examines the role of dual sourcing (e.g., outside options) in vertical and horizontal relations. In a bilateral monopoly market, if either the upstream or downstream firm has outside options, the other firm could lose from seemingly positive shocks, e.g., market expansion or technology improvements. We extend this setting to a bilateral duopoly market in which each downstream firm has outside options and upstream firms can engage in cost reducing investments and generate technological spillovers. We find that each upstream firm has an incentive to voluntarily generate technological spillovers to its upstream rival if the downstream firms have better outside options. |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:0936&r=bec |
| By: | MIZUNO Takayuki; SOUMA Wataru; WATANABE Tsutomu |
| Abstract: | This paper investigates the structure and evolution of customer-supplier networks in Japan using a unique dataset that contains information on customer and supplier linkages for over 500,000 incorporated non-financial firms for the five years from 2008 to 2012. We find, first, that the number of customer links is unequal across firms: the customer link distribution has a power-law tail with an exponent of unity (i.e., it follows Zipf's law). We interpret this as implying that competition among firms to acquire new customers yields winners that attract a large number of customers, as well as losers that end up with fewer customers. We also show that the shortest path length for any pair of firms is, on average, 4.3 links. Second, we find that link switching is relatively rare. Our estimates indicate that 92% of customer links and 93% of supplier links survive each year. Third and finally, we find that firm growth rates tend to be more highly correlated as the closer two firms are to each other in a customer-supplier network (i.e., the smaller is the shortest path length for the two firms). This suggests that a non-negligible portion of firm growth fluctuations stem from the propagation of microeconomic shocks—shocks that affect a specific firm—through the customer-supplier chains. |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:15056&r=bec |
| By: | G. Dosi; M. Grazzi; D. Moschella |
| Abstract: | In this work we analyze the relationship between the patterns of firm diversification, if any, across product lines and across bodies of innovative knowledge, proxied by the patent classes where the firm is present. Putting it more emphatically we investigate the relationship between "what a firm does" and "what a firm knows". Using a newly developed dataset matching information on patents and products at the firm level, we provide evidence concerning firms' technological and product scope, their relationships, the size-scaling and coherence properties of diversification itself. Our analysis shows that typically firms are much more diversified in terms of products than in terms of technologies, with their main products more related to the exploitation of their innovative knowledge. The scaling properties show that the number of products and technologies increase log-linearly with firm size. And the directions of diversification themselves display coherence between neighboring activities also at relatively high degrees of diversification. These findings are well in tune with a capability-based theory of the firm. |
| JEL: | C81 D22 L20 L25 O31 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp1004&r=bec |
| By: | Linda Kleemann |
| Abstract: | Smallholders often have to certify according to international standards and produce under contract for large agro-businesses to access the export market. While mostly positive effects for the farmers have been found for contracts and certifications, little is known about the role of individual firm behavior and certifications in shaping farmer-agro-business relationships and contract success. This is what this article does. Data of 386 smallholders in the pineapple export sector in Ghana is analyzed quantitatively and enriched by a detailed case study of a large-scale agro-business in Ghana called Blues Skies. The results show that certification is an agent of change in farmer–agro-business relations. Building trust and aligning expectations of farmers and firms is important for success. Additionally, individual firm behavior matters more than taken into account in previous research. Our case study shows that three “R”, reliability, reputation and respect, constitute the basis for contract relationships that benefit all |
| Keywords: | contract farming, certification, smallholders, Ghana, firm behavior |
| JEL: | D21 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1997&r=bec |
| By: | Janaina Pamplona da Costa (State University of Campinas, Department of Science and Technology Policy) |
| Abstract: | This article addresses network alignment through an investigation of network governance (coordination) and structure, and examines how regional level network governance and structure influence the effectiveness of technology policy to improve local firms’ innovativeness in a developing country context. It examines whether network governance and structure have a consistent influence on firms’ innovative performance in developing country regions with different levels of socio-economic development. The empirical evidence is based on case studies of the Campinas and Recife regional software networks in Brazil and the innovative performance of the participating local firms. We find that adoption of a general technology policy prescription and formation of networks to improve firm-level innovation and regional catch-up should involve careful consideration of the intended effects: membership of a network may not be a necessary condition for improved innovation at firm level. |
| Keywords: | network alignment; network governance; Brazilian software industry; innovation networks; technology policy effectiveness; regional development |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:sru:ssewps:2015-14&r=bec |
| By: | Ramon Casadesus-Masanell (Harvard Business School, Strategy Unit); John Heilbron (Harvard Business School) |
| Abstract: | This paper considers the nature of the business model and its strategic relevance to negotiations. We elaborate a definition of the business model as decisions enforced by the authority of the firm; this definition builds on the analytical success of previous approaches while enabling the analysis of business models through the analysis of individual firm choices. We situate negotiation outcomes within the strategy literature by considering 'ambivalent value', value produced by the interaction of two firms that does not necessarily accrue to either. The extent of 'ambivalent value' is unclear, but its persistence despite changing structural features of the market promises to help sustain superior profits in the long run. We conclude with an exploration of ways in which a firm's business model may impact negotiation outcomes. Several of the proposed pathways work intuitively through the intrinsic characteristics of agents (motivation, personality, etc.) negotiating on behalf of the firm; others operate independently of these characteristics. |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:hbs:wpaper:15-089&r=bec |
| By: | Siim Rahu |
| Abstract: | Export growth requires not only entry into new markets, but also the survival of trade flows. This paper analyses the role of initial product export share and product differentiation in Estonian manufacturing export survival. For this purpose, detailed firm-product-destination level export data is used from 1995–2011. The data show that adding and dropping new products is rife, about half of the firms change their export portfolio annually, but the average export flow duration remains modest at two years and the median even less. The Cox proportional hazards model reveals in various settings that survival is better if the initial export share is larger and exports are more differentiated. Previous experience with foreign markets and different products has a positive impact on survival. Policies aimed at increasing knowledge about foreign markets are supporting export success. |
| Keywords: | export survival, product level, Estonian manufacturing, Cox model |
| JEL: | F12 F14 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:mtk:febawb:97&r=bec |
| By: | Letizia Montinari; Massimo Riccaboni; Stefano Schiavo |
| Abstract: | This paper contributes to the literature explaining firm-level heterogenenity in the extensive margin of trade, defined as the number of products exported by each firm. We develop a dynamic model where firms must invest in RD to maintain and increase their portfolio of goods: the process of product innovation by incumbent firms is such that the probability to capture new products is a function of the number of varieties already exported. Varieties can also be produced from scratch by new entrepreneurs. The entry/exit dynamics of varieties, together with population growth that characterize the economy, gives rise to a distribution for the number of products exported by each firm with a heavy right tail, which is consistent with the data. This markedly heterogeneous behavior in export markets occur even if we do not assume any heterogeneity in productivity to start with. On the other hand, we assume that differences in export sales across products originate from the demand- side of the model, in the form of a product-specific preference attribute. Finally, a simple extension of the model allows us to derive some interesting insights on the behavior of multi-products firms: sales of different products across destinations are not uncorrelated, but show a rather strict hierarchy. |
| Keywords: | international trade, extensive margin, innovation, preferential attachment, multi-product firms |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpem:2015/04&r=bec |
| By: | Dincer, Nergiz; Tekin-Koru, Ayça |
| Abstract: | This paper provides a firm level portrait of services exporters along with goods exporters in a developing country. Current findings of firm level services trade literature suggest that the stylized facts of goods trade apply to services trade as well for a set of developed countries. This paper investigates if similar results hold for a developing country, Turkey, for the period 2003-2008. Most results lend support to the evidence found in the previous literature. However, the analysis of Turkish data shows that firms that export both goods and services are larger than those exporting goods or services only. |
| Keywords: | Goods and services exporters, services exports, firm heterogeneity, developing country |
| JEL: | F10 F14 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:64363&r=bec |
| By: | Jonathan Borggren; Rikard H. Eriksson; Urban Lindgren |
| Abstract: | Following the impact on regional renewal and employment ascribed to rapidly growing firms (high-impact firms, HIFs), this paper argues that little is still known in economic geography and business studies today regarding the mechanisms influencing growth of such firms and, hence, the potential impact on regional employment. The aim of this paper is thus to explore how the qualitative content of skills (i.e. the degree of similarity, relatedness and unrelatedness) recruited to a firm during a period of fast growth influences its future success. Our findings, based on a sample of 1,589 HIFs in the Swedish economy, suggest that it is not only the number of people employed that matters in aiding the understanding of the future destiny of the firms –"but also, more importantly, it is the scope of the skills recruited and their proximity to related industries. |
| Keywords: | high-impact firms, skills, relatedness, labor flows |
| JEL: | L25 R12 R23 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1512&r=bec |
| By: | Braunerhjelm, Pontus (Swedish Entrepreneurship Forum, Department of Industrial Economics and Management, Centre of Excellence for Science and Innovation Studies (CESIS) & Royal Institute of Technology (KTH)); Desai, Sameeksha (Indiana University); Eklund, Johan E. (Swedish Entrepreneurship Forum and Jönköping International Business School) |
| Abstract: | Entrepreneurship can have important positive effects linked to job creation, wealth and income generation, innovation and industry competitiveness. Scholars and policy-makers around the world have turned to the regulatory environment as a mechanism through which entrepreneurship can be encouraged, grown and its economic benefits harnessed. The effect of regulatory conditions on entrepreneurship however is not well understood, and can be nuanced given the wide range of regulatory tools and possible areas of impact. This paper serves as the introduction to a special issue, which seeks to shed some light on the relationship between regulation, firm dynamics and entrepreneurship. We identify some foundational considerations relevant to this relationship and discuss key questions, followed by a brief overview of each of the papers contained in the special issue. |
| Keywords: | entrepreneurship; regulation; firm; entry |
| JEL: | K20 L30 L51 M13 |
| Date: | 2015–05–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0405&r=bec |
| By: | Berk, Istemi (Energiewirtschaftliches Institut an der Universitaet zu Koeln) |
| Abstract: | This paper analyzes the strategic firm behavior within the context of a two-period resource duopoly model in which firms face endogenous intertemporal capacity constraints. Firms are allowed to invest in capacity in between two periods in order to increase their initial endowment of exhaustible resource stocks. Using this setup, we find that the equilibrium price weakly decreases over time. Moreover, asymmetric distribution of initial resource stocks leads to a significant change in equilibrium outcome, provided that firms do not have the same cost structure in capacity additions. It is also verified that if only one company is capable of investment in capacity, the market moves to a more concentrated structure in the second period. |
| Keywords: | Dynamic Duopoly; Cournot Competition; Endogenous Intertemporal Capacity Constraints; Subgame Perfect Nash Equilibrium |
| JEL: | D43 L13 Q32 |
| Date: | 2015–05–05 |
| URL: | http://d.repec.org/n?u=RePEc:ris:ewikln:2014_013&r=bec |
| By: | Gicheva, Dora (University of North Carolina at Greensboro, Department of Economics); Link, Albert (University of North Carolina at Greensboro, Department of Economics) |
| Abstract: | The role of gender in entrepreneurship has been thoroughly investigated. However, less is known about gender differences in access to private investment when attempting to develop a new technology. In this paper we use data collected by the National Research Council of the National Academies to estimate differences between the probability that a female-owned firm and a male-owned firm, both conducting research funded by the Small Business Innovation Research (SBIR) program, will receive private investment funding to help to commercialize the funded technology. We find that female-owned firms are disadvantaged in their access to private investment, especially in the West and Northeast regions of the United States. |
| Keywords: | private investments; entrepreneurship; gender; technology; innovation |
| JEL: | L26 O31 O38 |
| Date: | 2015–05–11 |
| URL: | http://d.repec.org/n?u=RePEc:ris:uncgec:2015_005&r=bec |
| By: | Maria Anne Schmidt (HTW Berlin University of Applied Sciences, Faculty of Informatics, Communication and Business); Daniel Cracau (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg) |
| Abstract: | Corporate social responsibility (CSR) is a phenomenon of increasing interest. Today, it is practiced in most countries around the globe and studied in various fields of academia. However, the focus still lies on Western developed countries, their understanding, and implementation of CSR. This paper focuses on the comparison of the orientation towards CSR in Germany and Qatar, thereby closing a research gap by providing insights from a Middle Eastern country. Based on a survey among 265 business students in both countries, the research examines their perception of the economic, legal, ethical, and philanthropic responsibilities of a firm. Findings suggest that, next to economic obligations, Qataris appear more willing to support philanthropic activities of a business while Germans highly value ethical standards. Moreover, females in both countries value economic responsibilities less important than males do. |
| Keywords: | mpirical Economics, Cross-Cultural Research, Corporate Social Responsibility Orientation (CSRO), Gender, Germany, Qatar |
| JEL: | M14 Z1 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:mag:wpaper:150006&r=bec |