nep-bec New Economics Papers
on Business Economics
Issue of 2015‒07‒18
twelve papers chosen by
Vasileios Bougioukos
Bangor University

  1. Agribusiness Firm Resources and Performance: The Mediating Role of Strategic Management Practices By Dominic, Theresia; Theuvsen, Ludwig
  2. Worker-level and Firm-level Effects of a Wage Subsidy Program for Highly Educated Labor: Evidence from Denmark By Kaiser, Ulrich; Kuhn, Johan Moritz
  3. The Great Trade Collapse and the Spanish Export Miracle: Firm-level Evidence from the Crisis By Peter S. Eppinger; Nicole Meythaler; Marc-Manuel Sindlinger; Marcel Smolka
  4. Do exporting firms benefit from retail internationalization? Evidence from France By Angela Cheptea; Charlotte Emlinger; Katrine Latouche
  5. Worker Reciprocity and the Returns to Training: Evidence from a Field Experiment By Sauermann, Jan
  6. Economic and Political Networks and Firm Openness: Evidence from Indonesia By SHIMAMOTO Daichi; TODO Yasuyuki
  7. Clean energy firms’ stock prices, technology, oil prices, and carbon price By Mara Madaleno; Alfredo Marvão Pereira
  8. Seniority Wages and the Role of Firms in Retirement By Frimmel, Wolfgang; Horvath, Thomas; Schnalzenberger, Mario; Winter-Ebmer, Rudolf
  9. All Good Things Come to an End: CEO Tenure and Firm Value By Limbach, Peter; Schmid, Markus; Scholz, Meik
  10. Export Experience, Product Differentiation, and Firm Survival in Export Markets By INUI Tomohiko; ITO Keiko; MIYAKAWA Daisuke
  11. How continuing exporters set the price? Theory and empirical evidence from China By Tan, Yong; Lin, Faqin; Hu, Cui
  12. Endogenous Business Cycles Caused by Nonconvex Costs and Interactions By ARATA Yoshiyuki

  1. By: Dominic, Theresia; Theuvsen, Ludwig
    Abstract: This study investigates the relationship between firm resources, strategic management practices and firm performance of small agribusiness firms. Looking at level of managerial expertise and access to market information as primary resources, this research presents various arguments about their contribution to firm performance. The objective is to demonstrate the role of strategic management practices in facilitating the effective use of these resources to achieve agribusiness firm performance. Results from a structural equation model using a sample of 229 agribusiness firms from Tanzania indicate that the investigated resources alone do not directly contribute to firm performance unless there is application of strategic management as a potential mediator. Further investigation based on multigroup analysis shows contingency effects in the resources-performance relationship but significant influence of application of strategic management practices on performance across all groups of firms. The results imply that managers ought to identify a fit between their resources and strategic actions in order to enhance firm performance. The study provides manifold managerial implications for small firms that seek to improve firm performance.
    Keywords: Structural modelling, firm resources, strategic management practices, small firm performance, mediation analysis, Tanzania, Agribusiness, Agricultural and Food Policy, Labor and Human Capital, Marketing, Q13, Q18, M31, J24,
    Date: 2015–03
  2. By: Kaiser, Ulrich (University of Zurich); Kuhn, Johan Moritz (CEBR, Copenhagen)
    Abstract: We study the effects of a Danish wage subsidy program for highly educated workers on the labor market outcomes of the persons participating in the program and on the performance of the firms that hired these subsidized workers. Using data on the population of program participants, both individuals and firms, we find that the program had positive effects on employment and wages the year individuals participate in the program. For wages, we also find positive and statistically significant effects for the two subsequent years. At the program participating firm level, we find statistically significant effects on the number of highly educated employees for both the period of program participation and the subsequent time period.
    Keywords: wage subsidies, firm performance, program evaluation
    JEL: D04 O31 O38
    Date: 2015–07
  3. By: Peter S. Eppinger; Nicole Meythaler; Marc-Manuel Sindlinger; Marcel Smolka
    Abstract: We provide novel evidence on the micro-structure of international trade during the 2008 financial crisis and subsequent global recession exploring a rich firm-level data set from Spain. The analysis is motivated by the surprisingly strong export performance of Spain in the aftermath of the great trade collapse (dubbed by some as the “Spanish export miracle”). The focus of our analysis is on changes at the extensive and intensive firm-level margins of trade, as well as on performance differences (jobs, productivity, and firm survival) across firms that differ in their export status. We find no adverse effects of the financial crisis on foreign market entry or exit, but a considerable increase in the export intensity of firms after the financial crisis. Moreover, we find that those firms that entered the crisis as exporters (and continued exporting throughout the crisis years) were more resilient to the crisis than those firms that restricted their sales to the domestic market. Finally, in contrast to exporters, non-exporters experienced a significant deterioration in their total factor productivity, which led to an overall decline in the productivity of a significant number of industries in Spanish manufacturing.
    Keywords: international trade, financial crisis, manufacturing, firm-level data,Spain
    JEL: F10 F14 G01 D24
    Date: 2015–04
  4. By: Angela Cheptea; Charlotte Emlinger; Katrine Latouche
    Abstract: We explore the link between globalization of the retail sector and the export activity of firms from their origin country. In a previous paper (Cheptea et al., 2015), we showed that exporting firms from countries with internationalized retail companies benefit more from this process than firms from other countries. Two mechanisms can explain this effect: a trade cost advantage for retailers’ domestic suppliers, or a shift in foreign demand from which benefit all origin country firms. In this paper we question which of the two mechanisms dominates. For that, we test whether retailers’ supplying firms benefit more from the overseas expansion of retailers than other origin country firms. We employ French firm-level data to evaluate the effect for the two types of firms. We identify retailers’ suppliers as firms that sell their products under French retailers’ brands or labels, i.e. French firms certified with the IFS standard. Our empirical objective is to estimate whether firms with IFS certification have better export performance on markets where French retailers operate. We find that certified French firms are more likely to export, and export larger volumes, than non-certified firms to markets where French retailers established outlets. We also show that when French retailers close down their activities in a market, IFS firms face a drop in exports to this market in the subsequent years. The results are robust to the use of different sets of firm- and country-specific fixed effects, are unaffected by possible selection and endogeneity biases, and the presence in export markets of other retailers. This difference in behavior for certified and non-certified exporting firms confirms the trade cost advantage of retailers’ suppliers, which is lost when French retailers exit from the destination country.
    Keywords: Mulitnational retailers, firm-level exports, Private standards
    JEL: F12 F14 F23
    Date: 2015–06
  5. By: Sauermann, Jan (SOFI, Stockholm University)
    Abstract: Workers' reciprocal behavior is one argument used to explain why firms invest in employee human capital. We explore the relation between firm-sponsored training and reciprocity by providing evidence that workers reciprocate employer training investments by making greater effort. Using a field experiment with random assignment to a training program, we show that reciprocal workers have significantly higher performance than their non-reciprocal peers after participation in the training course. This result suggests that reciprocal workers exert greater effort in response to the firm's investment.
    Keywords: firm-sponsored training, reciprocity, field experiment
    JEL: J24 M53 D01
    Date: 2015–07
  6. By: SHIMAMOTO Daichi; TODO Yasuyuki
    Abstract: Using firm-level dataset from the manufacturing sector in Indonesia, we examine how firms' ties with the government in receiving rents and with other firms and their managers' trust toward foreigners and views of globalization are correlated with each other. We find that firms' strong political ties are associated positively with the level of managers' trust toward domestic citizens and the number of domestic buyers and suppliers and negatively with their level of trust toward foreign nationals. In turn, managers' trust toward foreign nationals and firms' transactions with foreign firms are positively correlated with each other, and trust and business networks within the country also show a positive correlation. When managers are more trusting of domestic citizens or when firms transact more with domestic firms, managers are more likely to have a negative view of globalization, incorporating such factors as the foreign ownership of firms and free trade. The results suggest a vicious cycle between the political ties of local firms and protectionist views and policies against globalization, which leads to economic stagnation due to a lack of diffusion of knowledge from abroad. This mechanism may explain why middle-income countries experience economic stagnation and cannot escape the "middle-income trap."
    Date: 2015–07
  7. By: Mara Madaleno (Department of Economics, Management and Industrial Engineering, University of Aveiro Aveiro, Portugal); Alfredo Marvão Pereira (Department of Economics, The College of William and Mary)
    Abstract: Production costs of alternative energies are still high, but increased demand for oil, future oil supply shortage concerns and climate change concerns, have led to the fast development of renewable energy firms. The sector accomplished has accomplished remarkable progress and attracted attention to clean energy, both at the industry level and at the academic side. With this work we attempt to determine whether or not the placement of a price on carbon emissions encourages investments in clean energy firms. Unlike previous literature we focus on the German case and we address the issue at the individual company level. We were able to verify this link but only for the case of companies whose weight over the amount of total energy produced is relevant, which is the case of solar in Germany.
    Keywords: Clean Energy; Firm Stock Prices; Oil Prices; Carbon Prices; Technology.
    Date: 2015–07–05
  8. By: Frimmel, Wolfgang (University of Linz); Horvath, Thomas (WIFO - Austrian Institute of Economic Research); Schnalzenberger, Mario (University of Linz); Winter-Ebmer, Rudolf (University of Linz)
    Abstract: In general, retirement is seen as a pure labor supply phenomenon, but firms can have strong incentives to send expensive older workers into retirement. Based on the seniority wage model developed by Lazear (1979), we discuss steep seniority wage profiles as incentives for firms to dismiss older workers before retirement. Conditional on individual retirement incentives, e.g., social security wealth or health status, the steepness of the wage profile will have different incentives for workers as compared to firms when it comes to the retirement date. Using an instrumental variable approach to account for selection of workers in our firms and for reverse causality, we find that firms with higher labor costs for older workers are associated with lower job exit age.
    Keywords: retirement, seniority wages, firm incentives
    JEL: J14 J26 J31 H55
    Date: 2015–07
  9. By: Limbach, Peter; Schmid, Markus; Scholz, Meik
    Abstract: This paper studies the trade-off between the benefits (e.g., experience, learning) and costs (e.g., CEO-firm mismatch, entrenchment) that arise over a CEO’s time in office. We find that CEO tenure exhibits an inverted U-shaped relation with firm value, profitability, and M&A announcement returns. Results stand various robustness tests including alternative explanations and CEO-firm fixed effects. For the average S&P 1500 firm the costs of tenure start to outweigh the benefits after about 12 years. Optimal CEO tenure, however, varies significantly depending on a firm’s economic environment that determines the cost-benefit relation of tenure. Results from sudden deaths, used to address endogeneity, confirm that high-tenure CEOs reduce shareholder value. While this study suggests that frequent CEO turnover can be valuable, it does not support a one-size-fits-all policy of CEO term limits.
    Keywords: CEO term limits, economic environment, firm value, mergers and acquisitions
    JEL: G30 G34 J24
    Date: 2015–07
  10. By: INUI Tomohiko; ITO Keiko; MIYAKAWA Daisuke
    Abstract: This paper examines the determinants of firm survival in export markets by explicitly taking into account the impact of firms' previous export market experience and their product differentiation. Utilizing a 16-year panel data set for Japanese manufacturing firms obtained from the Basic Survey of Japanese Business Structure and Activities compiled by the Ministry of Economy, Trade and Industry, we employ both hazard and panel probit estimations to examine the likelihood of exit from export markets. The results of our estimations show, first, that the exit probability from export markets decreases over the export duration. Second, the probability of exiting from export markets tends to be lower when firms are more research and development (R&D) intensive both prior to and after starting exports. Third, firms in industries that manufacture differentiated products (e.g., machinery) also experience higher survivability in export markets. These results imply that learning from exporting plays an important role in firms' survival in export markets. In addition, our results imply that firms producing differentiated products likely have a greater incentive to make up-front investments to start exporting, and that these investments in turn enable such firms to survive in export markets for a longer period.
    Date: 2015–07
  11. By: Tan, Yong; Lin, Faqin; Hu, Cui
    Abstract: In this paper, we build a dynamic game model of quantity competition to explain the price difference between continuing exporters and exits. Continuing exports are forward looking and they may intentionally set a lower price in the export market at current stage to crowd out the competitors to maximize the overall expected profit in their total life period. Using a large sample of matched panel data of Chinese firms from firm-level production data and product-level trade data, we find that after controlling the most important determinants of export price as well as the firm-year-specific effects, continuing exporters charge a price 42.4%-54.0% lower than the price level charged by future exits in China.
    Keywords: Export prices, Dynamic game, Quantity competition
    JEL: C73 F10
    Date: 2015–07
  12. By: ARATA Yoshiyuki
    Abstract: This paper shows that endogenous business cycles (inventory cycles) arise from a combination of nonconvex costs and economic interactions among firms. At the micro level, firm behavior is characterized by lumpiness, and the standard production-smoothing theory is empirically rejected. To account for this, a nonconvex cost function is assumed in our model. It might be expected that even if the microeconomic behavior is lumpy, that effect disappears at the aggregate level because of the law of large numbers. However, we show that if there exist interactions among firms, a regular endogenous cycle emerges at the aggregate level given that the degree of the interaction effect exceeds a critical point. That is, the randomly behaving microeconomic agents generate deterministic collective behavior via interactions. It offers an explanation for the Kitchin cycle.
    Date: 2015–07

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