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on Business Economics |
| By: | Bonfiglioli, Alessandra; Crinò, Rosario; Gancia, Gino A |
| Abstract: | We study how financial frictions affect firm-level heterogeneity and trade. We build a model where productivity differences across monopolistically competitive firms are endogenous and depend on investment decisions at the entry stage. By increasing entry costs, financial frictions lower the exit cutoff and hence the value of investing in bigger projects with more dispersed outcomes. As a result, credit frictions make firms smaller and more homogeneous, and hinder the volume of exports. Export opportunities, instead, shift expected profits to the tail and increase the value of technological heterogeneity. We test these predictions using comparable measures of sales dispersion within 365 manufacturing industries in 119 countries, built from highly disaggregated US import data. Consistent with the model, financial development increases sales dispersion, especially in more financially vulnerable industries; sales dispersion is also increasing in measures of comparative advantage. These results can be important for explaining the effect of financial development and factor endowments on export sales. |
| Keywords: | Financial Development; Firm Heterogeneity; International Trade |
| JEL: | F12 F14 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11175&r=bec |
| By: | Böckerman, Petri (Labour Institute for Economic Research); Laaksonen, Seppo (University of Helsinki); Vainiomäki, Jari (University of Tampere) |
| Abstract: | We perform decompositions and regression analyses that test the routinization hypothesis and implied job polarization at the firm level. Prior studies have focused on the aggregate, industry or local levels. Our results for the abstract and routine occupation groups are consistent with the routinization hypothesis at the firm level. The observed changes are linked to ICT adoption. Thus, disappearing middle-level (routine) work can be traced to firm-level technological change. |
| Keywords: | skill-biased technological change, job polarization, routinization |
| JEL: | J23 J24 J31 O33 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9851&r=bec |
| By: | Bender, Stefan; Bloom, Nicholas; Card, David; Van Reenen, John; Wolter, Stefanie |
| Abstract: | Recent research suggests that much of the cross-firm variation in measured productivity is due to differences in use of advanced management practices. Many of these practices - including monitoring, goal setting, and the use of incentives - are mediated through employee decision-making and effort. To the extent that these practices are complementary with workers' skills, better-managed firms will tend to recruit higher-ability workers and adopt pay practices to retain these employees. We use a unique data set that combines detailed survey data on the management practices of German manufacturing firms with longitudinal earnings records for their employees to study the relationship between productivity, management, worker ability, and pay. As documented by Bloom and Van Reenen (2007) there is a strong partial correlation between management practice scores and firm-level productivity in Germany. In our preferred TFP estimates only a small fraction of this correlation is explained by the higher human capital of the average employee at better-managed firms. A larger share (about 13%) is attributable to the human capital of the highest-paid workers, a group we interpret as representing the managers of the firm. And a similar amount is mediated through the pay premiums offered by better-managed firms. Looking at employee inflows and outflows, we confirm that better-managed firms systematically recruit and retain workers with higher average human capital. Overall, we conclude that workforce selection and positive pay premiums explain just under 30% of the measured impact of management practices on productivity in German manufacturing. |
| Keywords: | Management practices; productivity; wages |
| JEL: | L2 M2 O32 O33 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11187&r=bec |
| By: | Shevtsova, Yevgeniya |
| Abstract: | The study explores the productivity effect associated with all types of firm’s export decisions across destinations. Using micro data on Ukrainian manufacturing firms operating during 2000-2005, I show that high-tech firms experience stronger productivity shocks associated with changes in their export status. Low-tech firms, instead, experience productivity improvements only when entering advanced export markets and are, on average, significantly less sensitive to changes in their export status. The results also show that firms’ characteristics, including productivity, not only improve the firm’s ability to self-select into exporting, but also increase its ability to penetrate a larger number of export markets. |
| Keywords: | exports; TFP; destination specific learning-by-exporting effect, export diversification, system GMM |
| JEL: | D24 F14 L25 |
| Date: | 2015–10–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:69793&r=bec |
| By: | Pedro Bento (Texas A&M University, Department of Economics) |
| Abstract: | I look at manufacturing firms across countries and over time, and find that barriers to competition actually increase the number of firms. This finding contradicts a central feature of all current models of endogenous markups and free entry, that higher barriers should reduce competition and firm entry, thereby increasing markups. To rationalize this finding, I extend a standard model in two ways. First, I allow for multi-product firms. Second, I model barriers as increasing the cost of entering a product market, rather than the cost of forming a firm. Higher barriers to competition reduce the number of products per firm and per market, but increase markups and the total number of firms. Calibrating the model to U.S. data, I estimate cross-country differences in consumption as large as 65 percent from observed differences in barriers to competition. In addition, increasing barriers generates either a negative or inverted-U relationship between firm-level innovation and markups. While higher markups encourage product-level innovation through the usual Schumpeterian mechanism, firm-level innovation (at least eventually) drops as firms reduce their number of products. I provide new evidence supporting these two novel implications of the model - that product-level innovation increases with barriers to competition, while the number of products per firm decreases. |
| Keywords: | product market regulation, entry costs, firm size, productivity, innovation, markups, competition, multi-product firms, innovation, inverted-U |
| JEL: | L1 L5 O1 O3 O4 |
| Date: | 2016–03–23 |
| URL: | http://d.repec.org/n?u=RePEc:txm:wpaper:20160323-001&r=bec |
| By: | Andrew B. Bernard; J. Bradford Jensen; Stephen J. Redding; Peter K. Schott |
| Abstract: | Research in international trade has changed dramatically over the last twenty years, as attention has shifted from countries and industries towards the firms actually engaged in international trade. The now-standard heterogeneous firm model posits a continuum of firms that compete under monopolistic competition (and hence are measure zero) and decide whether to export to foreign markets. However, much of international trade is dominated by a few "global firms," which participate in the international economy along multiple margins and are large relative to the markets in which they operate. We outline a framework that allows firms to be of positive measure and to decide simultaneously on the set of production locations, export markets, input sources, products to export, and inputs to import. We use this framework to interpret features of U.S. firm and trade transactions data and highlight interdependencies across these margins of firm international participation. Global firms participate more intensively along each margin, magnifying the impact of underlying differences in firm characteristics, and explaining their dominance of aggregate international trade. |
| Keywords: | firm heterogeneity, international trade, multinationals, multi-product firms |
| JEL: | L11 L21 L25 L60 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1420&r=bec |
| By: | Anne Marie Knott; Carl Vieregger |
| Abstract: | Since Schumpeter, there has been a long-standing debate regarding the optimal firm size for innovation. Empirical results have settled into a puzzle: R&D spending increasing with scale while R&D productivity decreases with scale. Thus large firms appear irrational. We propose the puzzle stems from the fact that product and patent counts undercount large firm innovation. To test that proposition we use recently available NSF BRDIS survey data of firms R&D practices as well as a broader measure of R&D productivity. Using the broader measure, we find that both R&D spending and R&D productivity increase with scale—thus resolving the puzzle. We further find that while large firms and small firms differ in the types of R&D they conduct, there is no type whose returns decrease in scale—there are merely types for which the small firm penalty is less severe. |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:16-20&r=bec |
| By: | Manuel García-Santana; Enrique Moral-Benito; Josep Pijoan-Mas; Roberto Ramos |
| Abstract: | Spanish GDP grew at an average rate of 3.5% per year during the expansion of 1995-2007, well above the EU average of 2.2%. However, this growth was based on factor accumulation rather than productivity gains as TFP fell at an annual rate of 0.7%. Using firm-level administrative data for all sectors we show that deterioration in the allocative efficiency of productive factors across firms was at the root of the low TFP growth in Spain, while misallocation across sectors played only a minor role. Cross-industry variation reveals that the increase in misallocation was more severe in sectors where government influence is more important for business success, which represents novel evidence on the potential macroeconomic costs of crony capitalism. In contrast, sectoral differences in financial dependence, skill intensity, innovative content, tradability, or capital structures intensity appear to be unrelated to changes in allocative efficiency. All in all, the observed high output growth together with increasing firm-level misallocation in all sectors is consistent with an expansion driven by a demand boom rather than by structural reforms. |
| Keywords: | TFP, misallocation, Spain |
| JEL: | D24 O11 O47 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:888&r=bec |
| By: | Eckbo, B Espen; Nygaard, Knut; Thorburn, Karin S |
| Abstract: | A board gender quota reduces firm value if it forces the appointment of under-qualified female directors. We examine this costly constraint hypothesis using the natural experiment created by Norway's 2005 board gender-quota law. This law drove the average fraction of female directors from 5% in 2001 to 40% by 2008, producing a large exogenous shock to director experience and independence. However, statistically robust analyses of quota-induced shareholder announcement returns, and of long-run stock and accounting performance, fail to reject the hypothesis of a zero valuation effect of this shock to board composition. Moreover, firms did not expand board size, nor is there significant evidence of quota-induced corporate conversions to a (non-public) legal form exempted from the quota law. Finally, our evidence on female director turnover and a novel network-based measure of director gender-power gap also fails to suggest that qualified female directors were in short supply. |
| Keywords: | ;ong-run performance; busy directors; corporate conversion; director independence; director network power; Gender quota; valuation effect |
| JEL: | G34 G35 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11176&r=bec |
| By: | Bronwyn H. Hall (Institute for Fiscal Studies); Christian Helmers (Institute for Fiscal Studies and Santa Clara University); Georg von Graevenitz (Institute for Fiscal Studies and Queen Mary University of London) |
| Abstract: | We analyze the effect of patent thickets on entry into technology areas by firms in the UK. We present a model that describes incentives to enter technology areas characterized by varying technological opportunity, complexity of technology, and the potential for hold-up in patent thickets. We show empirically that our measure of patent thickets is associated with a reduction of first time patenting in a given technology area controlling for the level of technological complexity and opportunity. Technological areas characterized by more technological complexity and opportunity, in contrast, see more entry. Our evidence indicates that patent thickets raise entry costs, which leads to less entry into technologies regardless of a firm’s size. |
| Keywords: | IPR, patents, entry, technological opportunity, technological complexity, hold-up |
| JEL: | O34 O31 L20 K11 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:16/02&r=bec |
| By: | Vasilev, Aleksandar |
| Keywords: | general equilibrium,unemployment and wages |
| JEL: | D51 E24 |
| Date: | 2016–02–22 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esrepo:129795&r=bec |
| By: | Mikel Casares (Departamento de Economía-UPNA); Hashmat Khan (Carleton University, Canada) |
| Abstract: | We document empirical evidence on the determinants of U.S. regional growth over the last 25 years, with a special attention to the role of entrepreneurial activity or `business dynamism'. The main data source is the Business Dynamics Statistics (BDS) released by the U.S. Census Bureau. The key findings are: i) business entry and exit rates are similarly distributed across states, ii) neither entry nor exit rates have had a significant impact on regional growth, iii) higher business density results in faster regional growth, iv) entry rates have fallen over time and the states with greater business detrending have had weaker economic growth, v) states where entry and exit show substantial comovement (business churning) tend to grow faster, especially after 2007, vi) state-level population growth has no substantial e ffect on regional growth, and vii) the convergence hypothesis holds across the states of the U.S. |
| Keywords: | Business dynamism, Entry-exit rates, Economic growth |
| JEL: | O30 O40 O51 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:nav:ecupna:1601&r=bec |
| By: | Goedhuys, Micheline (UNU-MERIT); Mohnen, Pierre (UNU-MERIT & SBE, Maastricht University) |
| Abstract: | Using micro evidence from manufacturing and services firms located in 55 African countries, this paper shows that better management practice, reflected by international management certification, helps firms to raise productivity. Larger and older firms and firms operating closer to the technological frontier are more likely to possess international management standards certification, as do firms engaged in international transactions. Certification in turn raises productivity levels further, in line with a process of continuous improvement. The findings hold for both manufacturing and services firms. |
| Keywords: | standards, productivity, Africa, manufacturing, services |
| JEL: | D02 D24 L15 O33 O55 |
| Date: | 2016–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2016012&r=bec |
| By: | Juan Carlos Matallín-Sáez (Department of Finance & Accounting, Universitat Jaume I, Castellón, Spain); Amparo Soler-Domínguez (Department of Finance & Accounting, Universitat Jaume I, Castellón, Spain); Emili Tortosa-Ausina (IVIE, Valencia and Department of Economics, Universidad Jaume I, Castellón, Spain) |
| Abstract: | This paper analyses the performance of US social responsible (SR) mutual funds in relation to the fund’s ethical strategy focus and whether the business cycle is in a state of expansion or recession. Our results show that in aggregated terms the abnormal performance of SR funds is negative and there are no significant differences based on their ethical strategy focus: environmental, ESG, religious and undefined. In general we also find no significant differences in performance according the state of the business cycle. In terms of methodology our analysis shows the relevance of considering a benchmark to cover idiosyncratic risks linked to the asset classes in which the fund invests according to its ethical commitments. This effect is especially relevant in the case of environmental funds due to the poor performance of the renewable energy industry since the 2008 financial crisis as a result of changes in green government policy and lower oil prices. Thus, part of the mutual fund performance will not be linked to managers but rather to the behaviour of these asset classes. |
| Keywords: | Mutual fund, performance, business cycle, environmental, ESG, SRI |
| JEL: | G23 G11 M14 Q56 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2016/03&r=bec |
| By: | Lionel Fontagné; Anne-Célia Disdier; Matthias Beestermöller |
| Abstract: | The cost of complying with a sanitary standard is certain. However, such regulatory measure introduces an element of uncertainty for exporting firms in relation to border rejections. Shipments may fail to pass inspections and may be refused entry into the importing country. This risk is shaped by variance in the quality of the exported product, and the stringency of the border controls. Large developing countries are over-represented in import refusals and may be targeted by inspectors. We examine how the risk of rejection at European borders on safety grounds is affecting Chinese agri-food exporters. We combine information from the European Rapid Alert System for Food and Feed with Chinese firm-level export data by product, destination and year for the period 2000-2011. We show that information externalities and reputation effects are important. Border rejections amplify the turnover among firms at the extensive margin of trade. This risk is curbing small Chinese exporters and resulting in a concentration of Chinese exports from big and more productive exporters. |
| Keywords: | Food Safety;Border Inspections;Import Refusals;Uncertainty;Firm Heterogeneity |
| JEL: | F14 L25 Q17 Q18 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2016-04&r=bec |
| By: | Michaël Assous (PHARE; University of Paris 1); Muriel Dal-Pont Legrand (GREDEG CNRS; Université Nice Sophia Antipolis); Harald Hagemann (University of Hohenheim, Stuttgart) |
| Keywords: | Business cycle, growth |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2016-06&r=bec |