nep-bec New Economics Papers
on Business Economics
Issue of 2015‒12‒12
ten papers chosen by
Vasileios Bougioukos
Bangor University

  1. Challenges of Change: An Experiment Training Women to Manage in the Bangladeshi Garment Sector By Macchiavello, Rocco; Menzel, Andreas; Rabbani, Atonu; Woodruff, Christopher
  2. Dynamics of innovation and internationalization among Vietnamese SMEs By Trinh, Long
  3. Environmental Policy: The Coevolution of Pollution and Compliance By Yannis Petrohilos-Andrianos; Anastasios Xepapadeas
  4. Social Capital and Debt Contracting: Evidence from Bank Loans and Public Bonds By Hasan, Iftekhar; Hoi, Chun-Keung (Stan); Wu, Qiang; Zhang , Hao
  5. Survive or Die? A Decade of Tough Competition for Foreign Affiliates By Giorgia Giovannetti; Giorgio Ricchiuti; Margherita Velucchi
  6. The network structure of city-firm relations By Antonios Garas; Celine Rozenblat; Frank Schweitzer
  7. Cournot Competition and "Green" Innovation: An Inverted-U Relationship By Luca Lambertini; Joanna Poyago-Theotoky; Alessandro Tampieri
  8. Evolution of Standards and Innovation By AOKI Reiko; ARAI Yasuhiro
  9. Forging a new Mittelstand compromise : lobbying strategies and business influence after the financial crisis By Keller, Eileen
  10. Collateral Values and Corporate Employment By Nuri Ersahin; Rustom M. Irani

  1. By: Macchiavello, Rocco (University of Warwick); Menzel, Andreas (University of Warwick); Rabbani, Atonu (University of Dhaka); Woodruff, Christopher (University of Warwick)
    Abstract: Large private firms are still relatively rare in low-income countries, and we know little about how entry-level managers in these firms are selected. We examine a context in which nearly 80 percent of production line workers are female, but 95 percent of supervisors are male. We evaluate the effectiveness of female supervisors by implementing a training program for selected production line workers. Prior to the training, we find that workers at all level of the factory believe males are more effective supervisors than females. Careful skills diagnostics indicate that those perceptions do not always match reality. When the trainees are deployed in supervisory roles, production line workers initially judge females to be significantly less effective, and there is some evidence that the lines on which they work underperform. But after around four months of exposure, both perceptions and performance of female supervisors catch up to those of males. We document evidence that the exposure to female supervisors changes the expectations of male production workers with regard to promotion and expected tenure in the factory.
    Keywords: JEL Classification:
    Date: 2015
  2. By: Trinh, Long
    Abstract: Innovation and internationalization have been considered as the major sources of growth for a long time. Various theoretical models suggest a bi-directional causality relationship between these two decisions. However, so far there is limited empirical evidence on whether there is a dynamic interdependence of innovation and internationalization decisions among SME firms in developing countries. Using a dynamic bivariate probit model and adopting a broader definition of internationalization, this paper analyzes the dynamic interdependence of internationalization and innovation decisions at the firm level in a developing country, by using a rich panel data set of SMEs collected biannually from 2005 to 2013 in Vietnam. Our empirical results show a high persistence in process, product innovations and internationalization decisions. Furthermore, we find that, for non-micro firms (i.e. firms with at least six fulltime permanent workers), past internationalization has a positive effect on process innovation but past process innovation do not has a significant effect on internationalization decision of these firms. For this group of firms, we also find signs of cross-dependence between process innovation and internationalization decision. Our empirical results, however, does not show dynamic interdependence between internationalization and product innovation. For micro firms, we do not find any evidence relating to interdependence of internationalization and both types of innovation.
    Keywords: internationalization, process innovation, product innovation, persistence of innovation, dynamic random effect bivariate probit, SME, Vietnam
    JEL: F14 L20 O31
    Date: 2015–12
  3. By: Yannis Petrohilos-Andrianos; Anastasios Xepapadeas
    Abstract: We study the evolution of compliance of firms in a setup of taxable emissions. Firms can either choose to comply with the emissions rule or violate it. Violation is considered either as a single option or is let to vary between low and high emissions, inducing a different level of fine if the firm gets caught. The firms can switch between strategies according to an evolutionary proportional rule and the conditions for stability are investigated accounting for two distinct types of probability of inspection.
    Keywords: Emission taxes, compliance, replicator dynamics.
    Date: 2015–12–07
  4. By: Hasan, Iftekhar (Fordham University and Bank of Finland); Hoi, Chun-Keung (Stan) (Saunders College of Business, Rochester Institute of Technology); Wu, Qiang (Lally School of Management, Rensselaer Polytechnic Institute); Zhang , Hao (Saunders College of Business, Rochester Institute of Technology)
    Abstract: We find that firms headquartered in U.S. counties with higher levels of social capital incur lower bank loan spreads. This finding is robust to using organ donation as an alternative social-capital measure and incremental to the effects of religiosity, corporate social responsibility, and tax avoidance. We identify the causal relation using companies with a social-capital-changing headquarter relocation. We also find that high-social-capital firms face loosened nonprice loan terms, incur lower at-issue bond spreads, and prefer bonds over loans. We conclude that debt holders perceive social capital as providing environmental pressure constraining opportunistic firm behaviors in debt contracting.
    Keywords: social capital; cooperative norm; moral hazard; cost of bank loans; public bonds
    JEL: G21 G32 Z13
    Date: 2015–11–20
  5. By: Giorgia Giovannetti (Dipartimento di Scienze per l'Economia e l'Impresa); Giorgio Ricchiuti (Dipartimento di Scienze per l'Economia e l'Impresa); Margherita Velucchi
    Abstract: Firms' survival and internationalization are key elements to assess a country's competitiveness. In this paper, we draw on these two strands of literature and study how firms' characteristics affect demographic dynamics. We focus on foreign direct investors' survival probability, modelling it conditional on both parent company and affiliates' set of characteristics. The novelty of our approach is twofold: on the one hand, we generalize the base model used in business demography disentangling the effect of affiliates and parents. On the other hand, we stress the technological level relationships between affiliates and their investors. For the empirical assessment, we use an original longitudinal database (2004 - 2012) for Italy. We show that, larger affiliates of large investors compete better and survive more. Being part of networks of affiliates in the same country and/or sector also decrease the risk of exiting markets. When the investors have a higher (lower) technological level, their affiliates' failure probability increases (decreases). When the investor is more advanced than its affiliates, it considers the investment abroad like a cost-saving, low skills investment. The investor will easily disinvest, moving to a more convenient economic context. Affiliates with a higher level of technology, instead, are considered strategic to the parent company, due to skills, talent or competencies.
    Keywords: Business Demography, Survival, Competitiveness, Internationalization
    JEL: C41 L11 L25 F21
    Date: 2015
  6. By: Antonios Garas; Celine Rozenblat; Frank Schweitzer
    Abstract: How are economic activities linked to geographic locations? To answer this question, we use a data-driven approach that builds on the information about location, ownership and economic activities of the world's 3,000 largest firms and their almost one million subsidiaries. From this information we generate a bipartite network of cities linked to economic activities. Analysing the structure of this network, we find striking similarities with nested networks observed in ecology, where links represent mutualistic interactions between species. This motivates us to apply ecological indicators to identify the unbalanced deployment of economic activities. Such deployment can lead to an over-representation of specific economic sectors in a given city, and poses a significant thread for the city's future especially in times when the over-represented activities face economic uncertainties. If we compare our analysis with external rankings about the quality of life in a city, we find that the nested structure of the city-firm network also reflects such information about the quality of life, which can usually be assessed only via dedicated survey-based indicators.
    Date: 2015–12
  7. By: Luca Lambertini (University of Bologna, Italy); Joanna Poyago-Theotoky (La Trobe University, Australia); Alessandro Tampieri (University of Luxembourg, Luxembourg)
    Abstract: We examine the relationship between competition and innovation in an industry where production is polluting and R&D aims to reduce emissions ("green" innovation). We present an n-firm oligopoly where firms compete in quantities and decide their investment in "green" R&D. When environmental taxation is exogenous, aggregate R&D investment always increases with the number of firms in the industry. Next we analyse the case where the emission tax is set endogenously by a regulator (committed or time-consistent) with the aim to maximise social welfare. We show that an inverted-U relationship exists between aggregate R&D and industry size under reasonable conditions, and is driven by the presence of R&D spillovers.
    Keywords: "Green" R&D, R&D Spillovers, Emission Taxation, Time-Consistent Emission Tax, Pre-Commited Emission Tax
    JEL: Q55 Q56 O30 L13
    Date: 2015–08
  8. By: AOKI Reiko; ARAI Yasuhiro
    Abstract: We examine how a standard evolves when both a standard consortium or firm (incumbent) and an outside firm (potential entrant) innovate to improve the technology. The incumbent improves to deter entry, and the entrant can invest to counter the incumbent's attempt. We show that only when the technology is mature and inertia is sufficiently low will there be entry leading to the coexistence of both standards. When the technology is in its infancy, the incumbent deters entry by technology improvement (upgrade) for any level of inertia. The entrant is never able to drive the incumbent out of the market (replacement). Our results suggest that competition policy to control inertia is not a substitute for policies to promote technological innovation, and that coordination of the two policies is essential.
    Date: 2015–12
  9. By: Keller, Eileen
    Abstract: How did business interests succeed in influencing the post-crisis financial sector reform agenda? The present article draws on a remarkable instance of lobbying success in the process of reforming the Capital Requirements Directive (CRD4-CRR), which regulates banking within the European Union. Business lobbyists from Germany, supported by representatives from other countries, obtained a more favourable regulatory treatment of bank lending to small- and medium-sized corporations (SMEs) compared to the stipulations of the internationally agreed upon Basel III framework. An in-depth study of the formation of this new so-called SME compromise shows that existing approaches, which either highlight the special role of business in shaping public policies or the constraining effects of increased political salience and the politicisation of an issue cannot account for the dynamics of business influence in the case in question. Whereas an inside evidence-based strategy of influence failed, lobbying was successful because business representatives actively increased the salience of the issue through an outside lobbying strategy.
    Keywords: SME compromise, business influence, lobbying strategies, CRD4-CRR, Basel III, capital requirements, regulatory reform, financial crisis, banking regulation
    Date: 2015
  10. By: Nuri Ersahin; Rustom M. Irani
    Abstract: We examine the impact of real estate collateral values on corporate employment. Our empirical strategy exploits regional variation in local real estate price growth, firm-level data on real estate holdings, as well as establishment-level data on employment and the location of firms' operations from the U.S. Census Bureau. Over the period from 1993 until 2006, we show that a typical U.S. publicly-traded firm increases employment expenditures by $0.10 per $1 increase in collateral. We show this additional hiring is funded through debt issues and the effects are stronger for firms likely to be financially constrained. These firms increase employment at establishments outside of their core industry focus and away from the location of real estate holdings, leading to regional spillover effects. We document how shocks to collateral values influence labor allocation within firms and how these effects show up in the aggregate.
    Keywords: Financial Constraints; Collateral Lending Channel; Employment
    JEL: D22 D24 E44 G31 G32
    Date: 2015–12

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