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on Business Economics |
| By: | Ryan A. Decker; John Haltiwanger; Ron S. Jarmin; Javier Miranda |
| Abstract: | The pace of business dynamism and entrepreneurship in the U.S. has declined over recent decades. We show that the character of that decline changed around 2000. Since 2000 the decline in dynamism and entrepreneurship has been accompanied by a decline in high-growth young firms. Prior research has shown that the sustained contribution of business startups to job creation stems from a relatively small fraction of high-growth young firms. The presence of these high-growth young firms contributes to a highly (positively) skewed firm growth rate distribution. In 1999, a firm at the 90th percentile of the employment growth rate distribution grew about 31 percent faster than the median firm. Moreover, the 90-50 differential was 16 percent larger than the 50-10 differential reflecting the positive skewness of the employment growth rate distribution. We show that the shape of the firm employment growth distribution changes substantially in the post-2000 period. By 2007, the 90-50 differential was only 4 percent larger than the 50-10, and it continued to exhibit a trend decline through 2011. The reflects a sharp drop in the 90th percentile of the growth rate distribution accounted for by the declining share of young firms and the declining propensity for young firms to be high-growth firms. |
| JEL: | E24 J63 L26 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21776&r=bec |
| By: | Jürgen Bierbaumer-Polly (WIFO); Werner Hölzl (WIFO) |
| Abstract: | We study the (macroeconomic) consistency of individual firm-level business tendency survey responses and take firm-level heterogeneity explicitly into account. Adding firm-level, industry- and region-specific structural characteristics allows controlling for additional microeconomic heterogeneity. The dataset we use are the business tendency survey micro data for Austrian manufacturing covering the time period 1996 to 2012. Our results show that firm-specific information embedded in the qualitative survey questions is relevant to understand aggregate business cycle dynamics. For example, the assessment of firms' order book levels, their current degree of capacity utilisation and their production expectations as well as obstacles in their production activities due to insufficient demand show evidence of a significant effect in explaining a firm's change in current production output. However, we do not find clear results with respect to firm size, nor do we find explanatory power of the industry affiliation of a firm and with respect to regional characteristics. We are able to identify heterogeneity in behaviour for cyclical up- and downswings as well as between large and small firms. |
| Keywords: | business cycle, business tendency surveys, firm-level expectations, ordered probit |
| Date: | 2016–12–16 |
| URL: | http://d.repec.org/n?u=RePEc:wfo:wpaper:y:2015:i:504&r=bec |
| By: | Luigi Guiso; Luigi Pistaferri; Fabiano Schivardi |
| Abstract: | We document that individuals who grew up in areas with high density of firms are more likely, as adults, to become entrepreneurs, controlling for the density of firms in their current location. Conditional on becoming entrepreneurs, the same individuals are also more likely to be successful entrepreneurs, as measured by business income or firm productivity. Strikingly, firm density at entrepreneur’s young age is more important than current firm density for business performance. These results are not driven by better access to external finance or intergenerational occupation choices. They are instead consistent with entrepreneurial capabilities being at least partly learnable through social contacts. In keeping with this interpretation, we find that entrepreneurs who at the age of 18 lived in areas with a higher firm density tend to adopt better managerial practices (enhancing productivity) later in life. |
| JEL: | J24 M13 R11 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21775&r=bec |
| By: | Richard W. Carney (Australian National University, Australia); Travers Barclay Child (VU University Amsterdam, the Netherlands) |
| Abstract: | Do political ties, family-business group affiliation, and professional connections collectively matter for firm performance? By exploiting a new dataset for 1,290 large East Asian firms during the 2008 financial crisis, we offer a holistic comparison of these different networks. We find that professional networks buoyed performance; political and family networks did not. This suggests information access is a key benefit of business networks. A one standard deviation improvement to a firm's professional network position cushioned quarterly ROA by 2/5 of a percentage point during the crisis. |
| Keywords: | networks; political connections; interlocking directorates; family ownership; corporate governance |
| JEL: | G3 G14 L14 |
| Date: | 2015–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20150135&r=bec |
| By: | J. David Brown; John S. Earle; Yana Morgulis |
| Abstract: | Analyzing a list of all Small Business Administration (SBA) loans in 1991 to 2009 linked with annual information on all U.S. employers from 1976 to 2012, we apply detailed matching and regression methods to estimate the variation in SBA loan effects on job creation and firm survival across firm age and size groups. The number of jobs created per million dollars of loans generally increases with size and decreases in age. The results imply that fast-growing firms (“gazelles”) experience the greatest financial constraints to growth, while the growth of small, mature firms is least financially constrained. The estimated association between survival and loan amount is larger for younger and smaller firms facing the “valley of death”. |
| JEL: | H81 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21733&r=bec |
| By: | Anissa Chaibi (IPAG Business School, Paris - GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - CNRS - Centre National de la Recherche Scientifique); Adel Ben Youssef (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - CNRS - Centre National de la Recherche Scientifique); Leila Peltier-Ben Aoun (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | This paper provides original empirical evidence on the causal links between e-skills, usage of Information and Communication Technologies (ICT) and firm's performance using a sample of Luxembourgian manufacturing and services firms. Firm performance is measured in terms of innovation (success of new projects settled). Our main findings are: (i) there's no relationship between the absorptive technology capacity of the firm (measured by ICT staff and Training) and the probability of the implementation of successful ICT projects, (ii) there is a positive effect of e-applications usage (ICT usage) on the probability of the implementation of successful new projects, and (iii) there is an asymmetric effect of usage of e-commerce and e-administration confirming findings of the recent literature |
| Keywords: | Innovative projects,Ordered models,Innovation,Usage of ICT,Depth of ICT adoption |
| Date: | 2015–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01068225&r=bec |
| By: | Omar Licandro |
| Abstract: | This paper integrates firm dynamics theory into the Neoclassical growth framework. It embeds selection into an otherwise standard dynamic general equilibrium model of one good, two production factors (capital and labor) and competitive markets. Selection relies on firm specific investment: i) capital is a fixed production factor {an entry cost, ii) the productivity of capital is firm specific, but observed after investment, iii) firm specific capital is partially reversible {its opportunity cost plays the same role as fixed production costs. At equilibrium, aggregate technology is Neoclassical, but TFP is endogenous and positively related to selection; capital depreciation positively depends on selection too, due to capital irreversibility. The Neoclassical model is the limit case of homogeneous firms. At steady state, output per capita and welfare both raise with selection. Rendering capital more reversible or increasing the variance of the idiosyncratic shock both raise selection, productivity, output per capita and welfare. |
| Keywords: | Firm dynamics, Selection, Neoclassical Growth model, Scrapping, Capital irreversibility |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcfc:15/17&r=bec |
| By: | Damon Morris (Department of Economics, University of Sheffield); Ian Gregory-Smith (Department of Economics, University of Sheffield); Brian Main (Business School, University of Edinburgh); Alberto Montagnoli (Department of Economics, University of Sheffield); Peter Wright (Department of Economics, University of Sheffield) |
| Abstract: | This paper evaluates the impact of the ‘A-day’ pensions simplification legislation introduced in the UK in 2006. This reform exogenously affected the cost of pension provision for firms whose executives had accumulated pensions benefits in excess of the prescribed limit. We find a strong reaction in the form of pension provision in a sample of UK executive directors. After A-day, many executives saw their defined benefit scheme replaced with supplementary cash payments. This had the unintended consequence of significantly decreasing the relationship between executive pay and firm performance for those executives affected by the reform. |
| Keywords: | Executive compensation; Executive pensions; Pay for Performance; A-day |
| JEL: | J32 J33 M12 M52 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2015026&r=bec |
| By: | Eleonora Fichera; John Gathergood |
| Abstract: | We exploit wealth shocks arising from housing wealth gains to examine the relationship between wealth and health. In UK household panel data positive housing wealth gains lower the likelihood of home owners exhibiting a range of non-chronic health conditions with no effect on renters. For owners housing wealth gains change health behaviours: increasing use of private health care, reducing hours of work (especially for women) and increasing time dedicated to exercise. Housing wealth gains, unlike income gains, do not increase risky health behaviours such as smoking and drinking. Furthermore, house prices highly pro-cyclical. The positive health effects of housing wealth gains on home owner health over the business cycle offset the negative health effects of labour market conditions and work intensity. |
| Keywords: | health, wealth, housing wealth, house prices |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcfc:15/20&r=bec |
| By: | Lorenzo Caliendo; Giordano Mion; Luca David Opromolla; Esteban Rossi-Hansberg |
| Abstract: | The productivity of firms is, at least partly, determined by a firm's actions and decisions. One of these decisions involves the organization of production in terms of the number of layers of management the firm decides to employ. Using detailed employer-employee matched data and firm production quantity and input data for Portuguese firms, we study the endogenous response of revenue-based and quantity-based productivity to a change in layers: a firm reorganization. We show that as a result of an exogenous demand or productivity shock that makes the firm reorganize and add a management layer, quantity based productivity increases by about 4%, while revenue-based productivity drops by more than 4%. Such a reorganization makes the firm more productive, but also increases the quantity produced to an extent that lowers the price charged by the firm and, as a result, its revenue-based productivity. |
| JEL: | D22 D24 F16 J24 J31 L23 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21811&r=bec |
| By: | Sari Pekkala Kerr; William R. Kerr |
| Abstract: | We study the prevalence and traits of global collaborative patents for U.S. public companies, where the inventor team is located both within and outside of the United States. Collaborative patents are frequently observed when a corporation is entering into a new foreign region for innovative work, especially in settings where intellectual property protection is weak. We also connect collaborative patents to the ethnic composition of the firm's U.S. inventors and cross-border mobility of inventors within the firm. The inventor team composition has important consequences for how the new knowledge is exploited within and outside of the firm. |
| JEL: | F02 F22 F23 J15 O19 O31 O32 O33 O34 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21735&r=bec |
| By: | Rasmus Lentz; Nicolas Roys |
| Abstract: | The paper studies human capital accumulation over workers' careers in an on the job search setting with heterogenous firms. In renegotiation proof employment contracts, more productive firms provide more training. Both general and specific training induce higher wages within jobs, and with future employers, even conditional on the future employer type. Because matches do not internalize the specific capital loss from employer changes, specific human capital can be over-accumulated, more so in low type firms. While validating the Acemoglu and Pischke (1999) mechanisms, the analysis nevertheless arrives at the opposite conclusion: That increased labor market friction reduces training in equilibrium. |
| JEL: | D21 D43 D83 E24 J24 J31 J33 J41 J62 J63 J64 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21702&r=bec |
| By: | Schäfer, Dorothea (DIW Berlin and CeFEO at Jönköping International Business School); Stephan, Andreas (Jönköping International Business School and CESIS at KTH Stockholm); Mosquera, Jenniffer Solórzano (Jönköping International Business School) |
| Abstract: | Using the 2007 Mannheim innovation survey, we investigate whether family firms are more financially constrained than other firms and how this affects both innovation input as well as innovation outcomes such as market and firm novelties or process innovations. Based on the CDM framework, estimation of the recursive system of equations shows that family businesses are more likely to be constrained and have, on average, lower innovation input. Surprisingly, however, this does not reduce their innovation outcomes as, on average, family firms have the same level of innovation outcomes as nonfamily firms. |
| Keywords: | Innovation; Capability; Financing Constraints; Family Firms; CDM |
| JEL: | D30 G32 O32 |
| Date: | 2015–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0425&r=bec |
| By: | Marcelo Fernandes (Queen Mary University of London and Sao Paulo School of Economics, FGV); Walter Novaes (PUC-Rio) |
| Abstract: | The subprime crisis led to a wave of government interventions in the private sector that has been particularly strong in Europe and Latin America, where several governments are large shareholders in a variety of public firms. In a sense, the subprime crisis induced these governments to behave as active large shareholders. This paper uses a sample of public firms in Brazil to show that government activism lowers the value of minority shareholders' voting rights. While the corporate governance literature usually associates lower voting premia with stronger protection of minority shareholders, we provide evidence that the government-induced decline in the value of voting rights harmed minority shareholders in Brazil. |
| Keywords: | Interventionism, Monitoring, Private benefits, Voting premium |
| JEL: | G14 G18 G30 G38 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:wp772&r=bec |
| By: | Mikhail Golosov; Guido Menzio |
| Abstract: | We propose a new business cycle theory. Firms need to randomize over firing or keeping workers who have performed poorly in the past, in order to give them an ex-ante incentive to exert effort. Firms have an incentive to coordinate the outcome of their randomizations, as coordination allows them to load the firing probability on states of the world in which it is costlier for workers to become unemployed and, hence, allows them to reduce overall agency costs. In the unique robust equilibrium, firms use a sunspot to coordinate the randomization outcomes and the economy experiences endogenous, stochastic aggregate fluctuations. |
| JEL: | D86 E24 E32 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21743&r=bec |
| By: | Dorothea Schäfer; Andreas Stephan; Jenniffer Solórzano Mosquera |
| Abstract: | Using the 2007 Mannheim innovation survey, we investigate whether family firms are more financially constrained than other firms and how this affects both innovation input as well as innovation outcomes such as market and firm novelties or process innovations. Based on the CDM framework, estimation of the recursive system of equations shows that family businesses are more likely to be constrained and have, on average, lower innovation input. Surprisingly, however, this doesnot reduce their innovation outcomes as, on average, family firms have the same level of innovation outcomes as nonfamily firms. |
| Keywords: | Innovation, Capability, Financing Constraints, Family Firms, CDM |
| JEL: | G32 O32 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1536&r=bec |
| By: | David M. Newbery and Thomas Greve |
| Abstract: | Industrial commodity markets are typically oligopolies in which firms set prices but need to make sunk and durable investment decisions, requiring them to make predictions of future prices. Mark-up pricing models are attractive both for setting prices and predicting future prices for investment analysis. Simple algorithms can find Nash equilibria, but these equilibria are not necessarily robust. This paper examines fixed and proportional mark-up models and demonstrates that they are robust to single firm Nash Cournot deviations but not against more sophisticated deviations in the deterministic case. Cournot equilibria are not robust under demand uncertainty, where proportional mark-up models emerge as the most robust when marginal costs are increasing. |
| Keywords: | market modelling, mark-up equilibria, robustness, oligopoly |
| JEL: | C63 C73 D43 L10 L13 L94 |
| Date: | 2015–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1540&r=bec |