nep-bec New Economics Papers
on Business Economics
Issue of 2016‒04‒23
fifteen papers chosen by
Vasileios Bougioukos
Bangor University

  1. Competition makes IT better : evidence on when firms use it more effectively By Iacovone,Leonardo; Pereira Lopez,Mariana De La Paz; Schiffbauer,Marc Tobias
  2. Assessing complementarity in organizational innovations for technological innovation: the role of knowledge management practices By Caroline Mothe; Uyen Nguyen-Thi; Phu Nguyen Van
  3. Allocating Effort and Talent in Professional Labor Markets By Barlevy, Gadi; Neal, Derek
  4. Production Networks, Geography, and Firm Performance By Andrew B. BERNARD; Andreas MOXNES; SAITO Yukiko
  5. Product Standards and Margins of Trade: Firm-Level Evidence Product Standards and Margins of Trade: Firm-Level Evidence By Lionel Fontagné; Gianluca Orefice; Roberta Piermartini; Nadia Rocha
  6. Role of Public Research Institutes in National Innovation Systems in Industrialized Countries: The cases of Fraunhofer, NIST, CSIRO, AIST, and ITRI By Patarapong INTARAKUMNERD; GOTO Akira
  7. Does gender-balancing the board reduce firm value? By Eckbo, B Espen; Nygaard, Knut; Thorburn, Karin S
  8. Innovation, Competition and Productivity. Firm Level Evidence for Eastern Europe and Central Asia By Klaus S. Friesenbichler; Michael Peneder
  9. Gains from Variety? Product Differentiation and the Possibility of Losses from Trade under Cournot Oligopoly with Free Entry By Collie, David R.
  10. Cinderella purchasing transformation: linking purchasing status to purchasing practices and business performance By Davide Luzzini; Stefano Ronchi
  11. The differentiated impacts of organizational innovation practices on technological innovation persistence By Christian Le Bas; Caroline Mothe; Thuc Uyen Nguyen-Thi
  12. The influence of the CEO and the largest shareholder on dividend payout policy in Thailand By Thitima Sitthipongpanich
  13. Directors as Connectors: The Impact of the External Networks of Directors on Firms By Quoc-Anh Do; Yen-Teik Lee; Bang Dang Nguyen
  14. From sustainability commitment to performance: The role of intra-and inter-firm collaborative capabilities in the upstream supply chain By Davide Luzzini; Emma Brandon-Jones; Alistair Brandon-Jones; Gianluca Spina
  15. Innovation success: What is the role of innovation strategies? By Jové Llopis, Elisenda; Segarra Blasco, Agustí, 1958-

  1. By: Iacovone,Leonardo; Pereira Lopez,Mariana De La Paz; Schiffbauer,Marc Tobias
    Abstract: This paper uses a unique firm-level data set for Mexico, with information never used for research before, to assess how use of information technology (IT henceforth) influences firm performance. Further, the paper explores if, in the context of increasing competition from China, this effect is different for firms more strongly affected by competition where incentives for upgrading and innovation may be more intense. In this perspective, the paper analyzes the complementarity between IT and other changes spurred by competition, taking advantage of the exogenous shock generated by Chinese competition. The results indicate that IT use has higher effects over productivity in the case of firms facing higher competition from China, in the domestic market and in the U.S. market. Furthermore, the paper shows how these changes appear to be driven by complementary investments in innovation and organizational changes.
    Keywords: E-Business,ICT Policy and Strategies,Technology Industry,Labor Policies,Knowledge for Development
    Date: 2016–04–13
  2. By: Caroline Mothe (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc); Uyen Nguyen-Thi (CEPS/INSTEAD - Centre d'Etudes de Populations, de Pauvreté et de Politiques Socio-Economiques / International Networks for Studies in Technology, Environment, Alternatives, Development - Centre d'Etudes de Populations, de Pauvreté et de Politiques Socio-Economiques / International Networks for Studies in Technology, Environment, Alternatives, Development); Phu Nguyen Van (BETA - Bureau d'Economie Théorique et Appliquée - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We here empirically investigate the pattern of complementarity between four organizational practices. Firm-level data were drawn from the Community Innovation Survey (CIS) carried out in 2008 in Luxembourg. Supermodularity tests confirm the crucial role of organizational innovation in raising firms’ technological innovation. The pattern of complementarity between organizational practices differs according to the type of innovation, i.e. product or process innovation, but also according to whether the firm is in the first stage of the innovation process (i.e. being innovative or not) or in a later stage (i.e. innovation performance in terms of sales of new products).
    Keywords: Supermodularity, Technological innovation,Complementarity, Organizational innovation, Substitution
    Date: 2015
  3. By: Barlevy, Gadi (Federal Reserve Bank of Chicago); Neal, Derek (University of Chicago)
    Abstract: In many professional service firms, new associates work long hours while competing in up-or-out promotion contests. Our model explores why these firms require young professionals to take on heavy work loads while simultaneously facing significant risks of dismissal. We argue that the productivity of skilled partners in professional service firms (e.g. law, consulting, investment banking, and public accounting) is quite large relative to the productivity of their peers who are competent and experienced but not well-suited to the partner role. Therefore, these firms adopt personnel policies that facilitate the identification of new partners. In our model, both heavy work loads and up- or-out rules serve this purpose. Firms are able to identify more professionals who can function effectively as partners when they require new associates to perform more tasks. Further, when firms replace experienced associates with new less productive workers, they gain the opportunity to identify talented professionals who will have long careers as partners. Both of these personnel practices are costly. However, when the gains from increasing the number of talented partners exceed these costs, firms employ both practices in tandem. We present evidence on life-cycle patterns of hours and earnings among lawyers that support our claim that both heavy work loads and up-or-out rules are screening mechanisms.
    Keywords: up-or-out, long hours, screening
    JEL: J44 J22 M51
    Date: 2016–03
  4. By: Andrew B. BERNARD; Andreas MOXNES; SAITO Yukiko
    Abstract: This paper examines the importance of buyer-supplier relationships, geography, and the structure of the production network in firm performance. We develop a simple model where firms can outsource tasks and search for suppliers in different locations. Low search and outsourcing costs lead firms to search more and find better suppliers. This in turn drives down firms' marginal production costs. We test the theory by exploiting the opening of a high-speed train line (shinkansen) in Japan which lowered the cost of passenger travel but left shipping costs unchanged. Using an exhaustive dataset on firms' buyer-seller linkages, we find significant improvements in firm performance as well as creation of new buyer-seller links, which are consistent with the model.
    Date: 2016–03
  5. By: Lionel Fontagné (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique); Gianluca Orefice (Centre d'Etudes Prospectives et d'Informations Internationales); Roberta Piermartini (WTO); Nadia Rocha (WTO)
    Abstract: This paper considers the heterogenous trade effects of restrictive Sanitary and Phyto-Sanitary (SPS) measures on exporters of different sizes, and the channels via which aggregate exports fall: firm participation, export values and pricing strategies. We do so by matching a detailed panel of French firm exports to a new database of SPS regulatory measures that have been raised as of concern in the dedicated committees of the WTO. By using specific trade concerns to capture the restrictiveness of product standards, we focus only on standards that are perceived as trade barriers. We analyze their effects on three trade-related outcomes: (i) the probability to export and to exit the export market (the firm-product extensive margin), (ii) the value exported (the firm-product intensive margin), and (iii) export prices. We find that SPS concerns discourage the presence of exporters in SPS-imposing foreign markets. We also find a negative effect of SPS imposition on the intensive margins of trade. These negative effects SPS are attenuated in larger firms.
    Keywords: International trade,firm heterogeneity,multi-product exporters,non-tariff barriers *
    Date: 2015–09
  6. By: Patarapong INTARAKUMNERD; GOTO Akira
    Abstract: Public research institutes (PRIs) were established for many reasons including promoting defense related research and health related research. Helping domestic industries remain as one of the important missions for PRIs even when the countries have become industrialized and firms' technological capabilities are high. PRIs aim to upgrade existing industries, especially small and medium-sized enterprises (SMEs), as well as spearheading new ones. They can conduct research to solve today's problems in the existing industries and those of next-generation technologies which may lead to the creation of new industries. Moreover, the relationship between PRIs and firms and non-firm actors such as universities became more intense, open, horizontal, international, and long term. To reduce risk and uncertainty inherent in the research mentioned above, the intermediary roles of PRIs are becoming increasingly important. The emphasis and the ways that PRIs help industry change over time and vary across countries as they are an integral part of national innovation systems. This makes generalization difficult, but the experiences of five leading PRIs in Germany, Taiwan, Japan, Australia, and the United States shows that the balances between contract research vs. longer term research with its own initiative, mobility of researchers vs. retaining core researchers, and competitive grants and funds from industry vs. block grants from governments are important in keeping PRIs relevant to industry needs and maintaining research standards. These balances depend on the nature of the national innovation system in which they are embedded. The governance of PRIs is of particular importance to maintain proper balances.
    Date: 2016–03
  7. 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
  8. By: Klaus S. Friesenbichler (WIFO); Michael Peneder (WIFO)
    Abstract: We investigate the drivers of firm level productivity in catching-up economies by jointly estimating its relationship to innovation and competition using data from the EBRD-WB Business Environment and Enterprise Performance Survey (BEEPS) in Eastern Europe and Central Asia. The findings confirm an inverted-U shaped impact of competition on R&D. Both competition and innovation have a simultaneous positive effect on labour productivity in terms of either sales or value added per employee, as does a high share of university graduates and foreign ownership. Further positive impacts come from firm size, exports, or population density. Innovation and foreign ownership appear to be the strongest drivers of multifactor productivity.
    Keywords: innovation, competition, productivity, development, transition economies, simultaneous system
    Date: 2016–04–13
  9. By: Collie, David R. (Cardiff Business School)
    Abstract: In a free-entry Cournot oligopoly model with a quadratic utility function that yields differentiated products, it is shown that there are losses from trade when the trade cost is close to the prohibitive level. Although the total number of varieties increases, there is a reduction in consumer surplus. This occurs because trade leads to an increase in imported varieties where consumer surplus is low due to the high trade cost and a decrease in domestically-produced varieties where consumer surplus is high. This result is in contrast with results from the free-entry Cournot oligopoly models with homogeneous products of Brander and Krugman (1983) and Venables (1985); the monopolistic competition models such as Krugman (1980) and Venables (1987), and heterogeneous firm models such as Melitz (2003) and Melitz and Ottaviano (2008).
    Keywords: Gains from Trade; Trade Liberalisation; Free Entry; Cournot Oligopoly; Product Variety
    JEL: F12
    Date: 2016–04
  10. By: Davide Luzzini (Audencia Recherche - Audencia); Stefano Ronchi (Politecnico di Milano [Milan])
    Abstract: This paper contributes to the ongoing debate about the relevance of the purchasing function for the firm value creation. We empirically examine the role of the purchasing function in improving business performance through an international survey based on 653 responses. Results suggest that purchasing practices related to spend rationalization have a positive impact on the overall business performance, whereas supplier development & integration and sustainable purchasing have not. Moreover, the purchasing recognition by top managers and other organizational units emerge as a powerful antecedent of all purchasing practices. Instead, pure formal authority provided by the position in the organization chart (i.e. the report level) does not have any influence on purchasing practices adoption.
    Keywords: Purchasing Status,Purchasing Practices,Business Performance
    Date: 2016
  11. By: Christian Le Bas (ESDES - École de management de Lyon - Université Catholique de Lyon); Caroline Mothe (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc); Thuc Uyen Nguyen-Thi (CEPS/INSTEAD - Centre d'Etudes de Populations, de Pauvreté et de Politiques Socio-Economiques / International Networks for Studies in Technology, Environment, Alternatives, Development - Centre d'Etudes de Populations, de Pauvreté et de Politiques Socio-Economiques / International Networks for Studies in Technology, Environment, Alternatives, Development)
    Abstract: This article tests the major determinants of technological (product and process) innovation persistence and provides evidence of the significant role of organizational innovation. Design/methodology/approach Data came from two waves of the Luxembourg Community Innovation Survey (CIS): CIS2006 for 2004–2006 and CIS2008 for 2006–2008. The longitudinal data set resulted in a final sample of 287 firms. A multinomial probit model estimates the likelihood that each firm belongs to one of three longitudinal innovation profiles: no, sporadic, or persistent innovators. Findings The determinants have differentiated impacts on process and technological innovation persistence. Organizational innovation influences technological innovation persistence. In the analysis of detailed organizational practices, strong evidence emerged that knowledge management exerts a crucial effect on product innovation persistence; workplace organization instead is associated with process innovation persistence.
    Keywords: R&D,persistence,innovation,Technological innovation,organizational innovation
    Date: 2015
  12. By: Thitima Sitthipongpanich (Dhurakij Pundit University)
    Abstract: In a setting of weak law enforcement and low investor protection, minority shareholders may find it difficult to extract cash from a company. This paper examines whether or not the CEO and the largest shareholder affect dividend decisions. Using a sample of Thai firms, I find that the CEO tenure and the ownership of the largest shareholder increase the likelihood of a dividend payout. As a result of high commitment and incentives, CEOs and the largest shareholder use dividend payments as a mechanism to mitigate free cash flow problems and reduce potential expropriation of minority shareholders. In addition, the possibility of a dividend payout decreases if firms are controlled by domestic financial institutions. Domestic financial institutions seem to play a significant role in monitoring management teams; consequently, the need for a dividend payment in alleviating agency costs is lower than other firms. Moreover, firms are more likely to pay dividends when they have higher profitability and a lower leverage ratio.
    Keywords: Dividend, CEO, large shareholder, agency costs, Thailand
    JEL: G30 G35
  13. By: Quoc-Anh Do (Département d'économie); Yen-Teik Lee (Singapore Management University); Bang Dang Nguyen (University of Cambridge)
    Abstract: The external networks of directors significantly impact firm value and decisions. Surrounding close gubernatorial elections, local firms with directors connected to winners increase value by 4.1% over firms connected to losers. Director network’s value increases with network strength and activities, and is not due to network homophily. Connected firms are more likely to receive state subsidies, loans, and tax credits. They obtain better access to bank loans, borrow more, pay lower interest, invest and employ more, and enjoy better long-term performance. Network benefits are concentrated on connected firms, possibly through quid pro quo deals, and unlikely spread to industry competitors.
    Keywords: External Networks of Directors; Board of Directors; Connectors; Regression Discontinuity Design; Close Gubernatorial Election
    Date: 2016–04
  14. By: Davide Luzzini (Audencia Recherche - Audencia); Emma Brandon-Jones (School of Management - University of Bath - University of Bath [Bath]); Alistair Brandon-Jones (School of Management - University of Bath - University of Bath [Bath]); Gianluca Spina (INFM-FIRENZE - Dipartimento di Fisica - Università degli studi di Ferrara)
    Abstract: Organisations increasingly see sustainability as an important element of their business strategies, and the role of purchasing and supply functions is critical in translating sustainability commitment into performance. Yet, the impact of sustainability commitment on purchasing processes and routines, as well as the effect of such capabilities on performance, remains empirically under-explored. From a Resource-Based perspective, we argue that commitment to sustainability leads purchasing and supply functions to develop intra-and inter-firm collaborative capabilities, and that in turn these capabilities deliver improved performance. Based on survey data from 383 procurement executives in ten European and North American countries, we use structural equation modelling to empirically test our hypotheses. Our results provide strong support for the hypothesised links between sustainability commitment and both intra-and inter-firm collaborative capabilities; and between inter-firm collaborative capabilities and environmental and social, and cost performance. Conversely, our data do not support the hypothesised links between intra-firm collaborative capabilities and both aspects of performance. In our discussion, we reflect on both confirmatory and conflicting findings in relation to theory and practice, before examining the study's limitations and opportunities for future research.
    Keywords: Sustainability,Purchasing and supply management,Intra-firm collaborative capabilities,Inter-firm collaborative capabilities
    Date: 2015–07
  15. By: Jové Llopis, Elisenda; Segarra Blasco, Agustí, 1958-
    Abstract: The objective of this paper is to explore the role played by firms' strategies during innovation process and its effects on innovation success. We argue that firm's innovative decisions not only concern how much innovation effort to make but, more especially, what kind of innovation objectives to pursue, which refer to strategic decisions taken at the level of the firm. Our econometric analysis is based on a sample of 3,919 manufacturing and services firms taken from the Spanish Technological Innovation Panel (PITEC) for the period 2008–2012. Firstly, applying a principal component analysis we identified a diverse range of innovation strategies (no strategy, unfocused, market, production, cost and environmental and regulatory strategy). Secondly, after controlling positive skewness of the dependent variables a generalized linear model is used to exanimate the impact of these innovation strategies. Our empirical results reveal some relevant aspects. Firstly, firms that do not have a well-defined innovation strategy experience fewer probability of being a successful innovative firm. Secondly, firms that do have an innovation strategy, but not focused on any specific orientation, have enhanced innovation success, but less than that of firms with an oriented strategy. Finally, the results also show that there is a good fit between an oriented strategy pursued by firms and their innovation success. Keywords: innovation objectives, innovation strategy, innovation success, Spain JEL Classification Numbers: D21. O31. O32
    Keywords: Conducta organitzacional, Innovacions tecnològiques -- Direcció i administració, 33 - Economia,
    Date: 2015

This nep-bec issue is ©2016 by Vasileios Bougioukos. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.